Work on $650m marine cable starts

By Ibrahim Kasita

THE construction of the $650m (about sh1.1 trillion) undersea optic fibre cable project starts this week after a financial close was reached last week.

The SEACOM project, a consortium of Venfin Limited (South Africa), Herakles Telecom LLC (US), Convergence Partners (South Africa), and the Shanduka Group (South Africa), will connect East Africa with to international broadband cables in South Africa, India and Europe.

Broadband is an information technology transmission system that allows data to flow at high speed. The 15,000 kilometre-long cable connecting Mozambique, Madagascar, Kenya and Tanzania, is expected to be ready by 2009.

The project will provide faster and cheaper broadband capacity for Africa for the growth of service industries like call-centres, back officers, media and research institutions.

Already MTN and Uganda Electricity Transmission Company are using the underground cables for communication and data reading.

Last week, the Industrial Promotion Services (IPS), a subsidiary of the Aga Khan Fund for Economic Development, joined other African investors backing the project.

Nedbank Capital, the investment banking arm of Nedbank Limited of South Africa, was appointed the lead arranger for debt funding requirements of the project. The funding will be provided by Nedbank Capital and Investec Bank.

“The agreements signed 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, the group managing director of IPS Kenya.

“The project will in turn spur economic growth and social development in the region through employment and connecting business opportunities.”
The SEACOM president, Brian Herliny, said the partnership was a milestone in the development of advanced broadband infrastructure for Africa.

“Ten years ago, 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,” he said.

Shanduka, the chairman of Cyril Ramaphosa, said: “This is a tremendous opportunity for our continent because the cable gives us the technical capacity for closer integration into the world economy where Africa will significantly share in the new opportunities and efficiency gains arising from this project.

“We are happy 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.”

Andile Ngcaba, the chairman of Convergence Partners, said improved access for business and individuals in Africa to communications, broadband services and new technology offerings would improve lives and help grow the economies.

“The linking of Southern and East Africa with India and Europe is crucial for enhancing development and trade between these key regions,” he said.
“Our agreement to proceed with the building of the cable is a great day for Africa.”

Mike Peo, the head of infrastructure project finance at Nedbank Capital, said the importance of the transaction in facilitating the delivery of affordable broadband access to countries in the region cannot be overemphasised as a facilitator of economic growth.
“Such is one of the most important telecommunications projects in recent years.

“Nedbank is proud to achieve a first in delivering an innovative limited recourse financing solution through our participation in a project of this nature,” he said.

SEACOM has already invested more than $10m in the marine survey and engineering of the cable. The advance work has allowed SEACOM to maintain its ready-for-service date of June 2009.

The estimated cost of satellite bandwidth on a monthly lease ranges from $1,700 to $6,000 megabit/second per month.
The SEACOM cable will be 20% cheaper than the current costs.