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Angola Sees Trans-Atlantic Cable Quickening Links to Asia

City Skyline In Luanda, Angola
The city skyline and promenade stand illuminated at night in Luanda, Angola, on Friday, Nov. 8, 2013. Photographer: Simon Dawson/Bloomberg

Nov. 12 (Bloomberg) -- Angola’s planned undersea cable to South America will cut data transmission times between stock markets in Brazil and Hong Kong and open a new route between Africa and the U.S., the head of state-owned Angola Cables said.

France’s Alcatel-Lucent SA, Japan’s NEC Corp., and TE Connectivity Ltd. are bidding for an estimated $170 million contract to lay the 6,000-kilometer (3,730-mile) cable between Africa’s second-biggest oil producer and Brazil, Angola Cables Chief Executive Officer Antonio Nunes said in a Nov. 5 interview in Luanda, the capital. Construction will start early next year and be completed in about 18 months, Nunes said.

The cable, which will be able to carry almost as much data as West Africa’s existing link to Europe, will quicken South American telecommunications access to Asia by cutting out North America and Europe and running via Africa instead, Nunes said. After crossing the Atlantic, the route will initially run south from Angola to South Africa, then to Africa’s east coast and existing lines to Asia.

The sub-sea route will create “the shortest distance between the Sao Paulo and Hong Kong stock markets, which will be appealing to banks,” Nunes said. “Even saving 100-160 millionths of a second adds up to a lot over time.”

U.S. Link

Angola wants to further reduce transmission times from South America to Asia by linking to networks with eastern neighbors Zambia and Tanzania within two years to avoid having to send data to South Africa, Nunes said. The cables are part of Angola’s plans to become a regional telecommunications hub and ease its dependence on oil, which accounts for 97 percent of exports and 75 percent of government tax revenue.

“We’re in a good geographic location, quite lucky being between Nigeria and South Africa, and at the other end of the Brazil line,” Nunes said. “The point is we’re in the middle so we can distribute traffic.”

Angola has about 1 million Internet users out of a population of 21 million people and has the potential for a fast rate of further growth in the coming years, Nunes said.

“Africa will have the same number of Internet users as the U.S. by 2015 and demand, while less at first, will be enormous as Africans, the world’s youngest population, are raised on technology,” he said. “This cable is the same thing as building roads.”

Potential Competition

The trans-Atlantic connection will help speed up African transmissions to the U.S. by sending data through Brazil instead of Europe. Angola Cables is also involved in a cable project from Brazil to the U.S. at Miami, Nunes said, declining to give further details

Angola is already linked to the West African Cable System that connects South Africa to Portugal, from which it gained independence in 1975. It has a capacity of 5.12 terabytes per second compared with 4 terabytes per second on the line being built to Brazil. Angola’s local partner in South America’s largest country is Brasilia-based Telecomunicacoes Brasileiras SA, known as Telebras.

Angola Cables, a group of the country’s telecommunications operators and 51 percent controlled by state-owned Angola Telecom, may be competing with three other projects that aim to link the two continents as the 2016 Rio de Janeiro Summer Olympics approaches, according to IHS Global Insight. These include WASACE Cable Co., which plans to connect Nigeria and Brazil, while i3 Africa Ltd. and Imphandze Investment Holdings Co. of South Africa want to link Cape Town and Brazil as part of a new global network.

Project Financing

eFive, a Johannesburg-based company, has signed deals with Alcatel-Lucent and TE Subcom, a division of TE Connectivity Ltd., to build a line from South Africa to Brazil, according to Kelvin Cottle, a spokesman for Alcatel based in Paris. Ros Thomas, the chief executive officer of eFive, said she couldn’t answer questions when reached by telephone because negotiations weren’t concluded.

Embratel Participacoes SA’s Atlantis 2, the first cable to link the two continents, began operating in 2000. The Brazilian company connects Argentina, Brazil, Senegal, Cape Verde, the Canary Islands and Portugal.

Angola Cables is arranging a project financing syndicate for the Brazil cable with Angola’s largest banks and some foreign lenders, which Nunes declined to name because the talks haven’t been concluded. Standard Bank Group Ltd., based in Johannesburg, has branches in the country. The government will guarantee a return on the investment in the cable, he said.

Angola Cables is also applying to the Southern Africa Development Community to establish the country as a regional Internet exchange point, which would offer operators a place to load content to the web without having to transmit to London.

“It will increase the quality and decrease the price,” he said. “We would lose one type of business as an operator selling access, but gain in selling capacity to link to the Internet exchange point.”

To contact the reporter on this story: Colin McClelland in Luanda at cmcclelland1@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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