WorldCity Business Magazine

Global connections

by Joachim Bamrud

It was one of the most spectacular busts in corporate history.

After spending billions of dollars to build the world’s first global fiber-optic network, linking hundreds of cities on six continents, Bermuda-based Global Crossing came crashing down in late 2001, along with investors and dotcom pipe dreams everywhere.

The anticipated spectacular demand for broadband communications had not materialized. And, instead of being feted for its visionary zeal, Global Crossing collapsed under $12 billion of debt, filing for bankruptcy in January 2002.

But the phoenix has risen. Out of the bankruptcy and cleared by the SEC of alleged accounting legerdemain, Global Crossing is now back in the news these days as it signs one major contract after another.

In March, the company announced a $100 million deal to provide global connectivity for the British Council, a government organization that promotes English language and British culture worldwide through 260 offices in 110 countries.

Other recent deals have been signed with Canadian telecom carrier Convergia, Brazilian airline Varig, Mexico’s Telmex telecom group (Telmex’s principal shareholder Carlos Slim has a stake in Global Crossing) and, in early May, Delta Air Lines.

The company’s resurgence, as its name suggests, spans the globe. And leading the charge to sign up new customers to fill its integrated global Internet Protocol-based network” is Venezuelan-born Miami resident Jose Antonio Rios.

From his 16th floor Brickell Avenue office, International President Jose Antonio Rios manages Global Crossing’s operations in more than 20 countries in Europe, Asia and Latin America.

He is also CAO, or chief administrative officer, of Global Crossing worldwide, responsible for human resources, real estate and every other administrative function at the company’s more than 50 offices. And, as if that were not enough, Rios is also the Chairman of Global Crossing UK.

While Global Crossing’s headquarters is in Florham Park, New Jersey, and Rios’ job takes him often to London, Miami is his home base. It’s a lifestyle thing, he explains.

That Rios is based in Miami as opposed to London, New York or Hong Kong makes little difference, he says. No matter what city he chose to call home, he would still have to travel to visit customers worldwide. And travel he does, at least three out of every four days. “I’m an old-styled manager,” says Rios. “I believe in looking at my customers face-to-face.”

Global Crossing provides the use of its private global IP network to carriers and companies that can use it for data, voice and video. That means cost savings for its customers, as they can use a single connection for all three purposes. Using Global Crossing’s private IP network, as opposed to the public Internet, also provides greater security to its customers.

A key driver behind the company’s recent successes is Voice-over-Internet Protocol (VoIP). In December of 2004, Global Crossing carried 2.3 billion VoIP minutes over its network. “We’re one of the world’s leading providers of VoIP,” says Rios. “And we have been since the beginning.”

Global Crossing’s Miami office has 80 employees, mostly focused on Latin America and local Florida businesses. “In Latin America we had a phenomenal year in 2004,” Rios says. IP revenues from carriers were up 44.1 percent and IP revenues from enterprises were up 99 percent, he says.

Brazil is the top market and the fastest growing in the region. But Argentina, Chile and Venezuela also posted solid growth last year. Much of the Argentine growth came from Arcor, the world’s top candy-maker. “We started with Arcor in Buenos Aires and have grown with them all over the world. Where they are, we are.”

Rios does not reveal total revenue for the company’s international operations, but does give specifics about the Global Crossing U.K. There, the company recorded sales of $480 million in 2004, an increase of 1 percent over 2003. More importantly, the U.K. operation posted a $73 million profit last year, compared to a $100 million loss in 2001.

“It’s a total turnaround,” he says. “Our business in the U.K. is very successful,” Rios says. Top U.K. clients include the Commonwealth & Foreign Office, Britain’s equivalent to the U.S. State Department. Global Crossing provides connectivity to 14, 000 users at 240 embassies and consulates in 140 countries. British Rail and Camelot (the operator of Britain’s national lottery) are two other major clients.

Rios has been key to the company’s international expansion. Prior to joining Global Crossing in 2001, he was president and CEO of Madrid-based Telefonica Media, where he played a key role in the merger of Telefonica’s Internet portal Terra with U.S.-based Lycos.

Before that he helped found and build Galaxy Latin America, a joint venture between Hughes Electronics, Brazil’s Grupo Abril and the Venezuela-based Cisneros Group. Rios worked as the company’s Fort Lauderdale-based president and CEO for four years. During that time, the direct-to-home satellite TV venture signed up more than 1.6 million subscribers in 27 countries.

Prior to Galaxy, Rios worked for 13 years with the Cisneros Group, including as COO and corporate vice-president. During that time he served on the board or was president of more than 60 Cisneros companies worldwide.

Rios has worked in Europe, Latin America and the United States, and traveled to over 90 countries on business. That experience means a highly valuable database of key contacts worldwide.

“We have access to every CEO of every major carrier and international enterprise we need to go after,” says Rios, who typically starts his day at five in the morning, going through e-mail from Europe.

Global Crossing emerged from bankruptcy in December 2003 after Singapore Technologies Telemedia acquired 61.5 percent of the shares for $250 million. The new owners rescheduled debt and embarked on tough cost-cutting programs. Payroll was reduced from nearly 18,000 to less than 4,000.

Despite the bankruptcy, Global Crossing managed to retain the majority of its customers, says Rios, and sign up new ones. But the company was also hurt by a long drawn-out investigation by the Securities and Exchange Commission over accounting irregularities. That investigation ended in April after the company settled without admitting or denying the SEC’s findings.

With bad debts and accounting scandals behind them, clear sailing is finally in sight. Profits, however, are not.

Last year, the company posted a $340 million loss, which was due to “a change of strategy, not a loss of customers,” says Rios. Global Crossing has reduced the number of services it offers and is concentrating on higher-margin ones, he explains.

Still, Global Crossing has continued its losses this year. Meanwhile, however, international sales keep growing. That’s certainly the case in Latin America. “In the first few months of 2005, growth has continued or accelerated,” Rios says. “The best is yet to come.”