Bharti Airtel Limited : Bharti Considering Taking Part in Cable System Joining BRICS Nations
06/21/2012| 06:28am US/Eastern
-- Bharti Airtel executive says talks in early stages, no decision yet
-- BRICS Cable founders' offering 10% stake for up to $100 million per investor
-- Final decision on investors, project to be made at Dubai meeting in first half of July
(Adds context in 4th to 6th paragraphs, background in 7th, 8th, 11th and 12th paragraphs, BRICS Cable's comments in 9th paragraph)
By R. Jai Krishna
NEW DELHI--Bharti Airtel Ltd. (532454.BY) is evaluating a proposal to join a consortium that is building an undersea cable network connecting the so-called BRICS countries to each other and the U.S., a senior executive at the Indian telecommunications company said.
The executive told Dow Jones Newswires recently that the discussions are in early stages and the company has yet to make a final decision on participating in the venture. He didn't want to be identified.
The cable system, being built at an estimated cost of $1.5 billion, will provide high-speed communications infrastructure among the BRICS nations--Brazil, Russia, India, China and South Africa--and 21 African countries, its website showed. It is likely to be ready for service by the second half of 2014.
Undersea fiber-optic cables are typically owned by consortia of telecom companies, which share costs and capacity. These cables, which transmit most international Internet data and voice phone calls, help reduce communications-related costs between trade partners.
The plan to join the BRICS economies via a submarine cable network comes at a time when these markets are feeling the heat from troubles in the euro zone and a faltering global economy.
Participating in the BRICS Cable consortium could help Bharti's expansion plans in Africa--a market it entered in 2010--at a time when India's largest telecom company by users is facing pressure in its home market from regulatory uncertainty and intense competition.
Imphandze Subtel Services Pty. Ltd. and i3 Africa Pty. Ltd., which are the South African founders of the BRICS Cable project, said they have approached Bharti to be part of the consortium.
Imphandze Subtel is a unit of South African investment company Imphandze Investment Holdings Pty. Ltd.
BRICS Cable is offering a 10% stake for up to $100 million per investor, Thylan Chetty, an i3 Africa executive involved in the project, told Dow Jones Newswires via email. He confirmed that Bharti is considering its participation in the project.
Bharti has invested about $500 million in seven such undersea cable networks previously.
To expand its business in Africa, Bharti is also considering joining two other undersea cable network consortia in the continent, a senior company executive said in an interview earlier this month.
BRICS Cable will connect three other cable systems in Africa--the West African Cable System, the Eastern Africa Submarine Cable System and the SEACOM cable system.
BRICS Cable has already signed initial pacts with some potential investors and non-disclosure agreements with some others for funding the project.
A meeting on the BRICS Cable project is scheduled for the first half of July in Dubai to decide on how to take the project forward.
Write to R. Jai Krishna at firstname.lastname@example.org