Corning pursues equity ventures
Corning Inc.'s (www.corning.com) Corning International Corp. has undergone measures to acquire shares in an equity company with Vietnam Post and Telecommunications Corp. (VNPT) and Aberdare Fiber Optic Cables
Corning Inc.'s (www.corning.com) Corning International Corp. has undergone measures to acquire shares in an equity company with Vietnam Post and Telecommunications Corp. (VNPT) and Aberdare Fiber Optic Cables. Corning Cable Systems (www.corningcablesystems.com), Corning Inc.'s cable division, will manage Corning's interest in the equity companies. An equity relationship is an investment in a separately operated corporation.
Corning Cable Systems will appoint Aberdare Fiber Optic Cable's marketing and commercial executive, while Aberdare Cables (Pty) Ltd., the other equity owner, will appoint the chief executive officer. Aberdare provides an optical cable product line, including duct and direct-buried cable, aerial cable, and tight-buffered cable for premises network applications. Corning will supply 100% of the venture's fiber requirements.
The transaction to acquire 50% of Aberdare Fiber Optic Cables, a South African manufacturer of optical fiber cable for the sub-Saharan telecommunications market, will be completed in two stages over the next two years. "This is an important equity relationship for Corning Cable Systems," says James R. Cooke, senior vice president, strategic planning and development for Corning Cable Systems. "In the short term, it will allow our company access to major end users who are not currently serviced, while establishing a strong presence over the long term to support the growing telecommunications demand in South Africa and other countries in sub-Saharan Africa." Corning decided to complete the transaction in two stages over the next two years for the convenience of both parties. Before the transaction is completed, Corning will begin to conduct business in South Africa to meet the existing demand. Also, South Africa is an important gateway to business across the African continent for Corning.
Corning seeks to broaden its presence in the Asian market by purchasing shares in an equity company with VNPT, Vietnam's primary telecommunications operator. Under the arrangement, Corning and VNPT will each own 50% of the company, which will manufacture optical fiber cable under its existing name, Fiber Optic Cable and Accessories Limited (FOCAL).
The option to purchase shares in FOCAL resulted from Corning Inc.'s acquisition last year of Siemens' optical fiber cable business. Corning first announced an agreement in principle with VNPT last November and has recently completed the agreement. "VNPT has strong expertise in developing high-quality telecommunications networks," says Mike Amicone, executive vice president, sales and marketing for Corning Cable Systems. "Uniting VNPT's capabilities and their desire to expand the Vietnamese telecommunications infrastructure with Corning Cable Systems' optical fiber cable expertise and technology positions us to collectively provide world-class telecommunications products and superior customer service." Integrated technologies will serve to expand the Vietnamese telecommunications infrastructure.
Pursuing equity relationships in Africa and Asia gives Corning a step toward building a global manufacturing and customer base. These legal relationships hope to meet a growing demand in these parts of the world.
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