Indians to bag another submarine cable network

Stuart Corner
Tuesday, 23 January 2007 09:00

IT Industry - Strategy

India is fast becoming one of the world's largest owners of submarine cables, with news that Indian company Bharti Airtel is to acquire Singapore Telecom's share of their jointly-owned i2i network linking India and Singapore.

SingTel says it has reached commercial understanding with Bharti Airtel to sell its 49.99 interest in Network i2i Limited for $US55 million. Final details are yet to be worked and a further announcement will be made "as and when the parties execute definitive agreements."

i2i was announced in October 2000. It was to involve the construction of a $US650 million 8.4tbps loop system (then the highest capacity ever announced) linking India to Singapore with landfalls in Chennai (Madras) and Mumbai (Bombay). At the time this represented a 100 fold increase India's international cable capacity.

A consortium consisting of Alcatel Submarine Networks of France and Fujitsu was awarded a $US250 million contract to design, manufacture and install the 3,200 km Singapore-Chennai section (which was manufactured at Alcatel's submarine cable plant in Sydney).

However the extension from Chennai to Mumbai was never built. Instead, in early 2002 shortly after the first section of i2i came into operation, SingTel and Bharti signed a memorandum of understanding to explore avenues for expanding i2i to the Middle East, Europe and Asia, either through investment in additional cable infrastructure or acquisition of capacity on other cable systems.

Many of the global submarine cable networks - conceived during the boom times of the late 1990s with billions of dollars of, largely, European and US funds - have fallen into Indian hands at bargain basement prices:

VSNL, part of the Tata Group, bought the Tyco global network, 60,000kms linking North America, Europe and Asia in mid 2005 for $US130 million. In January 2004, Reliance Infocomm of India purchased the global FLAG Telecom for $US211 million. According to market watcher, Telegeography, both prices represented about five cents in the dollar on the build costs of the networks.