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Wednesday, January 17, 2007
Rebecca Harrison
JOHANNESBURG: Reliance Communications plans to build a submarine cable around the east of Africa that could help slash Internet costs and rival the continent's own much-delayed plans for a cable.
Flag Telecom, a unit of Reliance, has said it will build a cable linking South Africa to Kenya via Mozambique, Tanzania, Madagascar and Mauritius as part of a plan to revamp its global network by the end of 2009.
The company said in December it was investing $1.5 billion to build the world's biggest Internet Protocol network over submarine cable systems covering 60 countries.
A company spokesman on Wednesday confirmed reports Flag wanted to build an east African cable but declined further details.
African countries have been planning their own cable to link South Africa to Sudan, boosting Internet capacity and slashing bandwidth costs in the east of the continent. But the project has been delayed due to wrangles over financing and access.
The East African Submarine Cable System (EASSy) project won backing from a 12th African country in December, meaning it can push ahead with the cable, although it is unclear whether it will launch as planned in early 2008.
No one at either Nepad, Africa's homegrown recovery plan that is managing the project, nor at the South African or Kenya communication ministries could immediately be reached for comment.
Reliance's Flag network already operates cables running through 37 countries on four continents and in September launched a cable linking India's financial hub Mumbai to Egypt.
An undersea cable is expected to cut Internet costs in east African countries by up to a third over five years and stimulate investment, particularly in countries like Kenya and South Africa, which are keen to nurture call-centre industries.
South Africa's fixed-line operator Telkom controls international bandwidth in the continent's biggest economy via an existing undersea cable linking the country to Europe via west Africa.
A second cable around the east of the continent could break that stranglehold and force prices lower, attracting investment and making services affordable for the poor.
South Africa's second national operator Neotel, which is managed by Videsh Sanchar Nigam Ltd, launched wholesale services late last year. Reliance competes with VSNL in the bandwidth market.
Reliance, which may take on Britain's Vodafone in a bidding war for India's Hutchinson Essar, plans to list a stake in Flag Telecom on the London Stock Exchange to raise $500-550 million, Indian newspapers reported this week.
(Additional reporting by Rina Chandran in Mumbai and Helen Nyambura-Mwaura in Nairobi)
Source: Reuters
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