Pacnet expands further into mainland China

Pacnet expands further into mainland China

Pacnet has expanded its IP VPN footprint further into mainland China, after its Chinese joint venture, Pacnet Business Solutions (PBS), received an enhanced service licence from the Chinese government.

The move expands PBS’s IP VPN coverage from 20 cities to 23 provinces, and the licence is the first of its kind to be awarded by China’s Ministry of Industry and Information Technology to a Sino-foreign telecoms joint venture.

PBS presently operates data centres in five Chinese cities and provides internet access in 10. It now plans to connect its IP VPN service to its existing data centres, providing a platform to offer managed services and cloud-based services.

“Our expansion plan positions Pacnet to capitalise on China’s robust growth by broadening the reach of our connectivity solutions around the country as corporations continue to expand their businesses across China,” said Carl Grivner, CEO of Pacnet.

Approximately 50% of PBS’s clients are domestic Chinese companies, with the other half being global multinational corporations.

The company hopes to tap into growing domestic demand for IP VPN services, which Frost & Sullivan estimates to increase from $974 million in 2012 to over $2.5 billion by 2017.

PBS will now be able to deliver its IP VPN service to the province-level municipalities of Beijing, Tianjin, Shanghai and, Chongqing and 18 provinces including Hebei, Shanxi, Liaoning, Jilin, Heilongjiang, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi, Shandong, Henan, Hubei, Hunan, Guangdong, Hainan, Sichuan, Shaanxi. The autonomous region of Inner Mongolia will also be covered.

Henry Lam, GM of Pacnet Business Solutions (China), said the move was a significant boost to its business “at a time where these services are in high demand”.

“We believe the expansion of our network and capabilities further cements our role as the premier gateway into Asia’s largest market, and one of the fastest growing telecommunications and e-commerce markets worldwide,” he added.

Pacnet’s expanded footprint in China could offer a competitive advantage in the crowded Asia-Pacific market, particularly given the company has experienced a turbulent 2012.

In May, the company removed Bill Barney as CEO, a position he had held for over a decade.

Shortly afterwards, Indonesia’s PT Telekom abandoned plans to make a $1 billion takeover of the company.

Pacnet, which is owned by a group of private equity firms including Ashmore Investment Management and Clearwater Capital Partners, put itself up for sale last year after poor market conditions prevented its plans for an IPO.

However, by July the company had appointed Carl Grivner as its new CEO, and in October it announced a new strategic plan targeting its enterprise and carrier customers. This latest move could be an indication that Pacnet is turning the situation around.