VSNL to lead India-Europe submarine link project

By agencies   |   Tuesday, 24 October 2006, 07:00 Hrs
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MUMBAI: Telephony and Internet services firm Videsh Sanchar Nigam has forged an alliance to construct a high capacity submarine cable linking India, West Asia and western Europe. Expected to be commissioned in mid-2008, the link will ensure availability of telecom and Internet bandwidth, demand for which is growing at an exponential pace.

The over 10,000 km cable, connecting Mumbai with France, will cost the consortium of five players including VSNL to the tune of $350-400 million. A company source says VSNL will be the biggest shareholder in the network with an investment of up to $150 million over the next 18 months giving it managerial and operational control. Etisalat, Saudi Telecom, Telecom Egypt and Telecom Italia Sparkle and VSNL have signed a memorandum for the construction of the network.

The move comes at a time when bandwidth requirement in India is expected to grow at 70% in the next five years. Bandwidth demand in West Asia is also growing at 70-80% and there is a spurt in demand from North Africa on the back of substantial growth in mobile telephony. Says a VSNL executive to India Business, "The expansion is to ensure that we are ready with new capacity when the additional demand comes in."

Industry specialists say despite adequate capacity available in India, new bandwidth is necessary as enterprise customers like telecom and Internet-based businesses buy up more than one link to build redundancies in the system. Globally, it is a norm to have bandwidth capacities of 2.5-3 times the actual demand because of multiple backup requirements of customers.

There is also belief that the increasing FDI in and out of the country will also bring in new demand for bandwidth from firms. For example, it is expected that Tata Steel which recently announced acquisition of Corus will buy international bandwidth to set up communication links between India, UK and Netherlands.

The system that will connect India, UAE, Saudi Arabia, Egypt, Italy and France is expected to be ready by mid-2008 and the construction contracts will be awarded in the next two months. It will have proposed design capacity of at least 2.56 terabits per second.

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