BOSTON (Reuters) - After pumping billions of dollars into the development of its undersea fibre-optic cable network, Tyco International Ltd. (NYSE:TYC - News) is getting only a trickle of revenue from its investment as it suffers the consequences of the telecom meltdown.

Over the past eight quarters, Tyco has spent about $3.5 billion on the undersea global network known as TyCom, company financial statements show.

But in the current quarter, Tyco expects the telecom unit to generate only $49 million in revenue, down from $173.2 million in the year-ago period.

The decline is remarkable given that TyCom's quarterly revenue exceeded $600 million during peaks in 2000 and 2001.

Mark Swartz, Tyco's chief financial officer, said on Tuesday that TyCom will continue to hurt the conglomerate's performance in the fiscal fourth quarter that ends September 30.

"Our TyCom loss is expected to increase by approximately $60 million" as compared to the third quarter, Swartz said on a conference call.

TyCom's deteriorating performance and Tyco's higher borrowing costs are expected to offset improvements in operating earnings in the majority of Tyco's businesses in the fiscal fourth quarter, Swartz said.

"It is expected that this business will continue to generate operating losses for the near term, as this market is not expected to show signs of recovery for the foreseeable future," Tyco said in its earnings release on Tuesday.

Tyco was not immediately available for comment on Wednesday.

TyCom was not always a drag on Tyco's performance.

In fact, it once underscored the savvy Wall Street attributed to former Tyco chairman Dennis Kozlowski, who abruptly resigned last month just before a criminal indictment on tax evasion charges.

TyCom Ltd. went public in July 2000 in what Tyco then described as the largest broadband initial public offering in US history, raising more than $2.2 billion.

TyCom sold 70.3 million shares, or about 14 percent of the company, at $32 apiece.

Tyco retained an 86 percent stake in TyCom, whose market capitalisation soared past $18 billion during its trading debut.

Tyco also received a $200 million dividend from the IPO proceeds, company filings show.

In the fiscal year that ended on September 30, 2000, TyCom's revenue surged 55 percent to $2.54 billion.

And it looked like Kozlowski's goal to design, build and sell capacity on the world's most advanced undersea fibre-optic network was well on its way.

Tyco's ultimate vision saw TyCom connecting major cities on 6 continents with a 155,000-mile (250,000-km) network.

But sales of undersea capacity have dried up as bankruptcies and the general telecom meltdown have waylaid TyCom's rivals and customers.

The downturn forced Tyco this year to cut the carrying value of TyCom on its books by $2.34 billion.

The write down came just months after Tyco used about $980 million worth of its stock to buy back the minority stake in TyCom that it did not already known.

The December 2001 move came after TyCom's market capitalisation had dropped by billions of dollars.