• Italian carrier competes with Telefonica in submarine cables
  • Company seeks growth as sales wane at Italian phone business

Telecom Italia SpA’s wholesale unit is investing more than $300 million in the first submarine fiber-optic cable connecting Brazil directly to the U.S., seeking a leg up against rivals such as Telefonica SA in systems that transport large amounts of data.

Telecom Italia Sparkle is joining the project led by Seaborn Networks Group Inc., according to the Rome-based company. Sparkle bought three pairs of fiber cables out of a total of six that make up Seabras-1, an undersea system linking Sao Paulo to New York. Seabras-1, which is being built by Alcatel-Lucent SA, will be ready for service in the second quarter of next year, Seaborn said Monday.

The Italian telecommunications carrier, struggling to reverse declining sales, is seeking new revenue sources as competition in the Italian and Brazilian wireless markets weighs on phone bills. Sparkle sells access to its network to customers such as Google Inc. and Verizon Communications Inc., and accounted for about 6 percent of Telecom Italia’s revenue in 2014.

“Seabras is one of our largest infrastructure investments,” Alessandro Talotta, head of Sparkle, said in a phone interview. The investment is set to make Sparkle the leader in the Americas wholesale market, he said.

Foreign Investors

Telecom Italia Chief Executive Officer Marco Patuano is seeking to revive the carrier’s sales and earnings as the company is attracting interest from foreign investors. France’s Vivendi SA boosted its stake to more than 20 percent last year and French billionaire Xavier Niel acquired securities equivalent to a holding of about 15 percent.

In Brazil, phone company Oi SA was working to have a merger proposal for Telecom Italia’s Tim Participacoes SA unit ready as soon as this month, a person close to the negotiations said last month. Russian billionaire Mikhail Fridman’s LetterOne has pledged to put as much as $4 billion into Oi, provided it combines with Tim before a May deadline.

Rival Telefonica, meanwhile, may revisit a possible sale of its undersea-cable unit as part of the Spanish phone carrier’s review of its infrastructure assets after failing to sell the business several months ago, two people familiar with the matter said last month.

Seaborn Networks said Monday it had completed $500 million of financing for the project.

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