SEACOM closes financing, starts construction of undersea fibre optic cable
Transcontinental Investment Boosts South and East African Economic and Social Development with High Capacity Link to India and Europe
African investors have taken a significant majority stake in SEACOM’s undersea broadband cable, joining hands with an international partner to link southern and east Africa with India and Europe in a massive technological boost to economic and social development on the continent.
The investors today gave the green light for construction of the state-of-the-art cable, committing financing for the broadband link from Mtunzini in South Africa to Mumbai in India and Marseille in France via Mozambique, Madagascar, Kenya, and Tanzania.
“This is a major milestone in the development of advanced broadband infrastructure for Africa by Africans”, said SEACOM President Brian Herlihy. “Ten years ago, very few believed African markets were capable of the tremendous growth experienced in the mobile industry. Today, we see the dawn of a similar revolution in the growth of data communications.”
High bandwidth at low costs will be a catalyst for productivity and the growth of service industries such as call-centres, back offices and research institutions in Africa. The additional bandwidth offered by the new cable will also contribute significantly to bringing the cost of connectivity down.
SEACOM has already invested more than $10-million in the marine survey and engineering of the cable. This advance work has allowed SEACOM to maintain its ready for service date of June 2009. Actual production of the high-tech cable and undersea repeaters start next week.
With more than three quarters of SEACOM’s shares owned by African investors, and agreements with service providers already in place or being finalised in most countries, the cable will provide a major boost to the continent’s international connectivity, and with it to economic and social development in Africa.
The US$ 650-million cable covers more than 15,000km. The investors in SEACOM are Industrial Promotion Services (25%), an arm of the Aga Khan Fund for Economic Development, Venfin Limited (25%), Herakles Telecom LLC (25%), Convergence Partners (12,5%), and the Shanduka Group (12.5%). Nedbank Capital, the investment banking arm of Nedbank Limited, was appointed as the Mandated Lead Arranger for all debt funding requirements of the project and the funding will be provided by Nedbank Capital and Investec Bank.
“The agreements signed today make the SEACOM broadband cable a reality for Africa, and with it access to much cheaper, much faster fibre optic links between countries in the south and east of the continent to the rest of the world,” said Lutaf Kassam, CEO of IPS in Kenya. “I am delighted that it has been possible to assemble a group of African investors to bring the prospect of progress and prosperity to many Africans in this manner.”
By providing an enormous 1.28 Terrabytes per second of broadband capacity (approximately ten times larger than the capacity on the SAT-3 cable system), SEACOM aims to bring prices for businesses, institutions, communities, and individuals down significantly. Providing sufficient bandwidth to accommodate high definition TV, peer to peer networks, IPTV, and surging Internet demand, SEACOM will make a direct contribution to meeting the New Partnership for Africa’s Development’s (NEPAD’s) goals of development for Africa’s renewal and its full and beneficial integration into the global economy. SEACOM will provide the first access to true broadband connectivity for countries on Africa’s Eastern seaboard which are presently 100% reliant on expensive satellite solutions.
“This is a tremendous opportunity for our continent, because the cable gives us the technical capacity for much closer integration into the world economy where Africa will significantly share in the new opportunities and efficiency gains arising from this project,” said Shanduka Chairman Cyril Ramaphosa. “We are extremely happy that the investors from South and East Africa have partnered with an international counterpart around our shared vision of linking Africa to the world in the spirit of NEPAD.”
SEACOM continues to engage governments in southern and east Africa in a concerted effort to ensure maximum benefit for the continent from the new broadband cable. At the core of the discussions, which are characterised by a spirit of cooperation and a very positive atmosphere, is the shared goal of closer working relationships in the interest of faster, cheaper broadband capacity for Africa.
“Improved access for business and individuals in Africa to communications, broadband services and new technology offerings can improve lives and help grow the economies of our countries. The linking of southern and east Africa with India and Europe is crucial for enhancing development and trade between these key regions.” said Andile Ngcaba, chairman of Convergence Partners. “Our agreement to proceed with the building of the cable is a great day for Africa.”
“The importance of this transaction in facilitating the delivery of affordable broadband access to countries in the region cannot be overemphasised as a facilitator of economic growth and as such is one of the most important telecommunications projects in recent years.” said Mike Peo, head of Infrastructure Project Finance at Nedbank Capital. “Nedbank Capital is extremely proud to achieve a first in delivering an innovative limited recourse financing solution through our participation in a project of this nature.”
See earlier announcement by Tyco Telecoms
see also Shanduka and Venfin