I am writing to correct and clarify several points in a Lightwave article about the submarine networks industry entitled, "Is survival the industry's new mantra?" (August 2001), written by Julian Rawle. There were a few inaccuracies related to TyCom and its activities that we felt you and your readers should be aware of.
In several places, Tyco Submarine Systems Ltd. (TSSL) is mentioned, including a reference to TyCom as being a subsidiary of TSSL. This has never been the case. In July 2000, we had an initial public offering (IPO), at which time we became TyCom Ltd. TSSL's name was changed to TyCom (U.S.) Inc. The TyCom Global Network (TGN) is being built by TyCom, and all activities related to that network as well as to our third-party network supply business are conducted by TyCom-named organizations.
The reference to TyCom using 50% of its manufacturing capacity to build the TGN is generally accurate, though that percentage varies, depending on the number of third-party systems and upgrades we are supplying. But we believe it is incorrect to state, as the author does, that TyCom's decision to allocate a percentage of manufacturing capacity to building our own network "make[s] matters worse" in terms of competition.
On the contrary, we believe that building a new global network adds a healthy level of competitiveness to the subsea-carrier industry. Further, as we proceeded with TGN network planning and deployment, our manufacturing capacity was expanded to accommodate both aspects of our business, without a negative impact on either one. Finally, the author states that TyCom is "sitting on the fence and its customers, the carriers, are watching warily. At some point, TyCom will have to decide which market it really wants to be in." This is also not the case. Since our IPO, we have stated on many occasions that our business model is based on two value propositions: a supplier of global undersea networks and support services to others and a provider of wholesale bandwidth capacity on the TGN. It is our belief that the market is aware of and has accepted this dual role, as evidenced by the fact that carriers continue to look to us for network builds as well as for subsea capacity.
Peter Ferris
Managing Director, Investor Relations and Corporate Communications
Tycom (U.S.), Exeter, NH