22 November 2007

Africa: Broadband Infrastructure Progressing Well

The Industrial Promotion Services (IPS), part of the Aga Khan Fund for Economic Development (AKFED) has joined other African investors in backing the construction of a US$ 650 million undersea optic fibre cable linking Mozambique, Madagascar, Kenya, and Tanzania with international broadband cables in South Africa, India and Europe (France).

A statement issued by the IPS Head of Infrastructure Dr. Kevin Kariuki said that the 15,000 kilometre long state-of-the-art cable is expected to be ready for service in 2009.

"SEACOMs venture will provide faster, cheaper, broadband capacity for Africa, 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," he said. The additional bandwidth offered by the new cable will also contribute significantly to bringing the cost of connectivity down. "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, 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," he said.

The partnership is a milestone in the development of advanced broadband infrastructure for Africa.

"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," said SEACOM President Brian Herlihy.

East Africa is the only part of the world without access to international cables and is desperate for low cost, high quality, international bandwidth. The estimated cost of satellite bandwidth on a monthly lease ranges from $1,700 to $6,000 per megabit/second per month. The same bandwidth on the SEACOM cable will be approximately 20% of current costs.

The investors in SEACOM are Industrial Promotion Services (Kenya) (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. IPS has operations in Kenya, Uganda, Tanzania and DR Congo and is also actively pursuing investment opportunities in Rwanda, Mozambique and Madagascar.

Outside the East and Central Africa region, IPS also operates in Cote d'Ivoire, Burkina Faso, Mali and Senegal, Tajikistan, Afghanistan, Kyrgyzstan, Pakistan and Canada. "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.", Ramaphosa said. 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 starts next week.

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.

SEACOM?s 1.28-Terrabytes-per-second broadband capacity will bring prices for businesses, institutions, communities, and individuals down significantly.

It will provide sufficient bandwidth to accommodate high definition TV, peer to peer networks, IPTV, and surging Internet demand.

SEACOM will also 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.

"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," he said.

Meanwhile, Mike Peo head of Infrastructure Project Finance at Nedbank Capital said "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."

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