Global Crossing Reports It Is Retaining Customers

Buoyed by monthly results that were better than expected, Global Crossing Ltd. said Monday that it was losing fewer long-distance customers than anticipated during its bankruptcy case and was busily signing new customers, especially in Europe, to large contracts for Internet services.

The increase in high-speed carrier business, offset by lower prices industrywide and slack sales of dial-up Internet services and other older services, comes as the company awaits bids Thursday for all or parts of its worldwide fiber-optic network.

“That customers haven’t left them doesn’t surprise me. But what does surprise me is that companies that have contracts with Global are extending them and signing on for more services,” said analyst David Neil of research firm Gartner Inc.’s Toronto office, who has talked with many Global customers.

“They don’t think Global is going to go down. They say that Global’s not a significant risk,” he said. And customers say service is improving on the cutting-edge network that connects 200 cities in 27 countries.

But the company can’t continue for long on its own, he said, even though it has reduced spending dramatically and put non-core assets on the block, including its Global Marine cable-laying and maintenance operation.

The $500 million that investor Warren Buffett and two others plan to make in Level 3 Communications Inc. raised the specter that it might bid on Global’s assets, but analysts were unsure that Level 3, with its own huge debt load, could make a meaningful bid. Carriers such as AT&T; Corp. and Verizon Communications Inc. could benefit from parts of Global but have expressed little interest thus far. Los Angeles financier Tom T. Gores probably will use his Platinum Equity to bid for the entire network.

Freed from onerous payments on $12.4 billion in bonds used to build the network, Global is showing what it can do as a telecommunications company.

In boasting that its Internet traffic has increased 400% this year, Global said its ability to switch customers to its network within 24 hours was a key attraction. In Europe, that is helping bring in customers from the collapsed KPNQwest, the Dutch company that started closing its fast-Internet business last week as it searches for a buyer for the rest of the firm.

In May, Global’s chief executive, John Legere, said the company had 85,000 customers. Global had expected to lose 3% of its customers while it is in Chapter 11 proceedings. But so far, the company said, it has not reached that mark. It would not provide further details.

For May, though, the numbers were only starting to kick in, the company said. Global lost $137 million, or 15 cents a share, an improvement from its April loss of $163 million, or 17 cents a share. Revenue slid slightly to $262 million in May from $266 million in April.

More important, the company was able to pad its cash on hand by $30 million to $766 million, thanks to the sale of assets by its 59%-owned subsidiary Asia Global Crossing Ltd., which is not in bankruptcy proceedings.

Without the subsidiary’s sales, Global Crossing and its units operating under Chapter 11 saw cash on hand drop $21 million, far less than in previous months. The company also has $392 million in restricted cash, mainly proceeds from the sale of assets that can be used only with Bankruptcy Court approval.

The amount of cash the company spends each month is an important gauge of how long it can exist and how much it will have to fund a reorganization. Legere has said the company would probably file a plan competing against the bidders to recapitalize Global.