Unified Communications Featured Article

Moody Gives UC Firm Affirmed B2

December 01, 2016

It was good news recently for Global Cloud Xchange (GCX), part of Reliance Communications and a presence of note in the unified communications (UC) front.  Word from Moody's affirmed the company's B2 rating on the heels of GCX's deployment of the Cumulous Network, a development that would offer plenty of added value for firms in the sector.

By bringing out the Cumulous Network, reports note, firms throughout India would receive better access to the provisioning of next generation communications, particularly UC, thanks to the platforms extended capabilities. This would also bode well for Reliance Communications (RCOM), parent company of GCX. RCOM recently underwent a major deleveraging thanks to a wireless merger with Aircel, and a new connection with Brookfield meant a tower divestment as well.

Remarks from Moody's vice president and senior credit officer Annalisa Di Chiara noted “The affirmation of GCX’s B2 rating reflects its moderate leverage position, continued revenue visibility afforded by its long-term contracts and our expectation that the company will continue to execute $65-70 million of IRU contracts in each of 2017 and 2018.” This was a development that left RCOM co-CEO and GCX CEO and chairman Bill Barney “pleased,” as he considered the Moody's report “...a validation of the strategic direction and success of our key initiatives, supported by our parent company RCOM.”

It would be easy to think that, following so many significant moves, that a company might well be regarded as unstable, or even a poor value in the short term, and that investment firms and the like would advise a wait-and-see approach following all these new measures. That's the kind of thing that might have choked off funding to a company that needed it in the midst of transition. By affirming a B2 rating, however, Moody's has made it clear the company is a good bet.

Typically, a B2 rating is considered the highest rating that a non-investment grade security can land. It's a higher level of risk than an investment-grade security issue, but it's certainly not a junk stock. GCX, and by extension RCOM, can use news like that accordingly to help drive its forward momentum, which it certainly has the fodder for given all the developments it's engaged in lately.

Moody's may have done GCX, and by extension, RCOM, a big favor here, and allowed the UC developers to carry on without risk of losing ground with investors. That may have made all the difference, and given the company real ground to work from in its further development.

Edited by Maurice Nagle