eFive Choses Alcatel-Lucent For Undersea Cable

South African telco eFive Telecoms has selected Alcatel-Lucent to build a new submarine cable network linking the west coast of Africa to South America, the French/US equipment vendor has announced. The network will consist of two trunks – the first one connecting South Africa to Angola and Nigeria, and a second trunk linking Angola to Brazil.

Alcatel-Lucent has confirmed that it will be in charge of the project end-to-end, with responsibility for the system’s design, manufacture and installation. The cable will be maintained by Alcatel-Lucent through its Atlantic Private Maintenance Agreement (APMA), which currently covers over 100,000km of submarine cable infrastructure from the west coast of Africa to the Caribbean and as far north as Greenland.

Lawrence Mulaudzi, managing director of eFive Telecoms commented: ‘We believe that high-growth areas such as the African continent require the development of new projects. The planned submarine network will also provide cable route diversity to South America, making the most economical and operational sense in the current landscape’. Philippe Dumont, head of Alcatel-Lucent’s submarine network division added: ‘Growth in African internet and mobile telephony is driving service providers’ demand for more connectivity options to ensure higher reliability, as well as increased widespread access to bandwidth.

This project will further position Africa as a major hub for broadband connectivity’.

Global Telecom World Currently Awash With Mergers & Acquisitions

The telecoms world is currently awash with major M&A activity – Bharti is close to completing its acquisition of many of Zain’s African operations, America Movil is pulling Carso Group (Telmex and Telmex Internacional) back into a single fold, Orange UK and T-Mobile UK are rolling their operations into a joint venture, and both Telefonica and Liberty Global recently completed acquisitions in Germany. The past year also saw consolidation of service providers in some key markets, including Brazil, South Korea and the United States, while 2010 should finally see some long overdue consolidation of operators in Russia.

What common thread is driving these activities? A recent round of service provider benchmarking analysis provides some answers. With telecoms market growth rates declining and not forecast to return to previous levels, organic growth is proving to be more difficult for some companies, and virtually impossible for others. There are some clear consequences.

Aggressive growth-oriented companies that are determined to bulk up and join the ranks of the largest operators are having to rely more on acquisitions – Bharti is a perfect example. Other companies, such as Deutsche Telekom, have already diversified geographically, but are under increasing pressure to improve financial performance, and are focusing on cost savings and margin improvement. In the middle sits Telefonica which has historically grown through aggressive international expansion, but which has managed to maintain above average profit margins. It can afford to seek out further acquisitions without incurring the wrath of investors.

'The natural urge to maximise growth and gain global market share remains, but is now tempered by a need to focus more on profit margins,' said TeleGeography’s John Dinsdale. 'While it may be counterintuitive, many of the world’s largest service providers have among the lowest margins, which restricts their M&A options. Expect the bolder acquisitions to come from smaller operators and those whose actions are not constrained by unhappy shareholders,' he added.

TeleGeography’s service provider benchmarking research includes analysis of revenues, profitability, subscribers, ARPU, growth rates, geographic footprint, market share, competitive positioning and future growth prospects. It is published as part of TeleGeography’s GlobalComms Insight service which is a companion to the GlobalComms Database, a regularly updated online database of wireline, wireless and broadband competition. No other telecoms market research service rivals their collective geographic scope and depth of coverage.
- TeleGeography.com