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Seacom cable to cut SA broadband costs

A $600m underwater fibre-optic cable has opened the prospect of much greater competition in one of the developing world’s most expensive and limited telecommunications markets.

The cable, launched last week, links south and east Africa to global networks in India and Europe. It will reduce the cost of wholesale broadband capacity by more than 90 per cent, allowing South Africa’s fixed-line and mobile operators to offer better and cheaper products.

East African markets such as Kenya, Uganda and Tanzania will also be transformed by the facility, which increases broadband capacity in the region more than 10 times and reduces dependence on expensive satellite connections.

“Today marks the dawn of a new era for communications between the continent and the rest of the world,” said Brian Herlihy, chief executive of Seacom, the group that has built the 17,000km cable.

Links connecting Johannesburg, Nairobi and Kampala have been established and more are planned for Kigali in Rwanda and Addis Ababa, capital of Ethiopia. 

“This will have a very big impact,” said Daniel Torres, analyst at Delta Partners, a consultancy based in Johannesburg. “It has removed a very big bottleneck.”

Telkom, the incumbent state-owned company, has a market share of more than 90 per cent of South Africa’s fixed-line market. Mr Torres said he expected competition to increase although the initial focus would probably be on products rather than price.

Neotel, a company led by Tata Group of India, and the two biggest mobile operators, Vodacom (a subsidiary of Vodafone of the UK) and MTN, are challengers to Telkom and likely to step up investment in the local market. MTN is currently in talks over a possible $23bn merger with Bharti Airtel of India.

Between them, Vodacom and MTN control more than 85 per cent of the South African mobile market and aim to step up their presence elsewhere in Africa.

The cable should resolve doubt about South Africa’s ability to broadcast next year’s World Cup.

Seacom’s capacity of 1,280 gigabytes per second will enable the broadcast of high-definition television and accommodate surging demand for the internet.

The cable is one of three being built to link Africa to the internet.

Seacom, privately funded and more than three-quarters African-owned, co-operated with Neotel in developing the cable’s South African end. But it said the facility was independent and open to any user.

Источник: Financial Times

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