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Altech and SEACOM announce strategic bandwidth alliance

September 17, 2009 • Mobile and Telecoms

Brian_Herlihy_SEACOM.jpgJSE listed Allied Technologies Limited (Altech) and SEACOM, today announced their strategic alliance for the mutual acquisition of bandwidth capacity on two cable systems.

The agreement sees Altech procuring two STM-16s from SEACOM (equivalent to 5Gbps), with the option to upgrade, within three years, to double this capacity, to an STM-64. SEACOM will in turn purchase six STM-64s throughout the East Africa region on the terrestrial backbone network owned by Kenya Data Networks (KDN), a subsidiary of Altech.

“This strategic alliance with SEACOM, and Altech’s investment in the construction of terrestrial networks needed to support SEACOM in bringing its capacity inland, allows us to play a leading role in radically changing the face of African connectivity. Altech has through the alliance secured the East African region for the distribution of much needed bandwidth. We are delighted to be partnering with SEACOM in this historic venture, pioneering the unlocking of a region hungry for low-cost, high-speed broadband access. The alliance is yet another element perfectly suited to Altech’s overall convergence strategy,” said Altech Chief Executive Officer, Craig Venter.

KDN is a ‘carrier-of-carriers’ telecommunications operator with 6000kms of fibre and radio infrastructure throughout East Africa. It is currently the largest data network infrastructure player in the region, intent on extending its reach throughout the African continent. This unique positioning makes it ideal as a network to link the SEACOM submarine cable to land-locked countries in East and Central Africa.

“The African market for international bandwidth is expected to swell to 800 Gbps, from today’s 10 Gbps, with a significant portion of this new demand coming from East Africa. Today, Altech and SEACOM have taken a giant step towards unlocking this enormous potential in East Africa. The success of SEACOM would not be possible without infrastructure which links our beach landing stations to metropolitan PoPs. KDN’s extensive inland infrastructure in East Africa will link our landing station in Mombasa to Nairobi, on to Kampala and Kigali,” said Brian Herlihy, SEACOM Chief Executive Officer.

Venter added, “Africa currently only has 1% broadband penetration compared to the US which has 60% penetration. Marrying KDN’s terrestrial fibre network with an abundance of bandwidth capacity complements our aims of unshackling a five country East African network. Kenya, Uganda, Rwanda and soon the DRC and Tanzania are to become competitive on a truly global scale and Altech will be instrumental in making this a reality.”

Through KDN, Altech currently provides the majority of backhaul capacity for the largest GSM operators in East Africa, namely Safaricom, Zain and Essar. KDN’s interest in the TEAMS undersea cable and Altech’s SEACOM capacity acquisition makes Altech one of the largest bandwidth suppliers in Africa.

“Bandwidth becomes significantly cheaper in bigger volumes, enabling Altech to pass on more competitive prices to its customers than other providers. Significant bandwidth customers have already been secured by Altech in the East African region,” said Venter.

SEACOM, the 1.28 terabits per second, 17 000km undersea fibre optic cable, linking South and East African countries to their European and Asian counterparts, was commercially launched at the end of July 2009. The cable is the first of many undersea cables anticipated to be completed in the next three years, facilitating low-cost bandwidth connectivity for East Africa.

The SEACOM cable is expected to trigger explosive growth in the region, as it enables African operators to invest in further rollouts of both transmission networks (e.g. national fibre) and access layer networks (e.g. WiMAX deployments). An extensive network rollout program would be challenging under a high-priced environment, where international bandwidth is provided solely via high cost satellite solutions. Satellite is considered to be eight times more expensive as compared to fibre. Insatiable demand is expected for the lower cost bandwidth made possible by SEACOM and Altech, enabling peer-to-peer networks and internet connectivity at markedly reduced prices and significantly increased capacities.

“Rather than selling capacity directly to end-users, we will provide our wholesale bandwidth to African retail carriers such as Altech, who buy a portion of bandwidth and onward sell this capacity to end-users. These end-users will in turn be able to access the internet at international broadband speeds and at more affordable prices, creating a wealth of opportunities for important sectors, such as education, healthcare and government services,” said Herlihy.

The key to Altech’s overall converged services strategy, is the exploitation of opportunities stemming from its recently acquired I-ECNS license. Altech Technology Concepts, the second tier corporate internet service provider and information technology company, requires better priced bulk bandwidth for its expansion plans and specifically into gated communities and office parks throughout South Africa.

The SEACOM bandwidth provision agreement, will thus not only increase the progress of Altech’s East African ambitions through KDN, but also pave the way for synergistic opportunities throughout the various businesses within the Altech Group. Notwithstanding the SEACOM investment, as well as various other acquisitions, Altech states that it will still conclude the year with a balance in excess of R500 million.


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