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A short post on TyCom:

1) TyCom has a very strong story. The company will be the only vertically integrated supplier/servicer in its field. Primary competitors include FLAG Telecom, Global Crossing, 360networks, and to a lesser extent, Level 3. TyCom's core competency is subsea fiber optic cable. The company's business plan is to stick to the transoceanic component of the world network. Terrestrial links are built or acquired only as necessary to provide backhaul connections between shore landing points and colocation facilities in major communications hubs (i.e., big cities).

2) The primary risks here are execution and oversupply.
Execution weighs heavily because the company is transitioning its business plan to a completely new model. Whereas prior to this TyCom only built cables for third parties now it is building cables for itself and will operate them itself. That means that the company has to build capabilities from scratch (no acquisitions have been made), including sales, marketing, back office, customer support, etc. Sound daunting? Well it isn't a very formidable task because the market they are looking to serve has a customer list that numbers in the low hundreds. The most important customers you can name. These are the big foreign PTTs (post, telephone, and telegraph) companies like Deutsche Telekom, NTT, and Optus, also major domestic companies like AT&T, Qwest, and WorldCom. The management is committed and has plenty of operational experience. It just isn't quite the same operations that they'll be tackling here.

The second great risk is supply/demand. Transpacific and transatlantic supply stands to explode in the next few years. The Yankee Group, Ovum, and others forecast demand in STM-1s and larger capacity that keeps pace with supply. Time will tell.

My 2 cents,

N.
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