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VSNL Boosts Asia Subsea Capacity

Light Reading
News Analysis
Light Reading
8/29/2006

With demand for telecom services booming across India and other Asian countries, Videsh Sanchar Nigam Ltd. (VSNL) (NYSE: VSL) is investing more than $600 million to upgrade its 20-terabit international submarine network with additional capacity. (See VSNL Plans Two Cable Systems.)

In a move that will have equipment suppliers like Alcatel (NYSE: ALA; Paris: CGEP:PA) and Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY) rubbing their metaphorical hands, VSNL said last week it plans to spend $600 million on building two new submarine cable systems -- one connecting India with Europe, and another connecting Singapore, Hong Kong, and Japan -- and today its international subsidiary in Singapore expanded on its plans for the intra-Asia cable. (See VSNL Plans New Asia Cable.)

The $200 million cable will operate alongside the Tata Indicom Cable (TIC) and the TGN-Pacific system, which are each capable of supporting more than 7-Tbit/s of traffic.

VSNL says the three cables will complete its capacity from India to Asia and onward to the U.S. The carrier currently buys bandwidth on the Singapore-Hong Kong-Japan leg of the SE-ME-WE consortium cable before it is connected to the west coast of the U.S.

VSNL expects to begin laying the new cable by December and complete the project in 12 to 14 months. In a prepared statement, the company said it's in the process of finalizing design details, selecting suppliers, and identifying additional partners. The cable could potentially extend in the future to landing stations in China, Taiwan, the Philippines, Vietnam, Malaysia, and Guam.

"With Asian bandwidth demand forecasted to grow at an average of 27% CAGR, VSNL International is taking steps to expand its capacity to serve customers in the booming intra-Asia market," said Vinod Kumar, president of VSNL International.

VSNL International also said today it will light additional capacity on the TGN-Pacific route, upgrading the cable from 640 Gbit/s to 1 Tbit/s by the end of the year. (See VSNL Boosts Trans-Pacific Cable.) TGN-P forms part of the Tyco Global Network that VSNL acquired in 2005 and connects several U.S. west coast exchanges directly to Japan, then onward into Asia through multiple regional interconnections. (See VSNL Buys Tyco's Subsea Network.)

The new India-Europe cable will cater to the growing demand for capacity from India to the U.S. via Europe being driven by the business process outsourcing and IT services industry. (See Who Does What: Outsourcing to India.) VSNL officials say they expect demand on that route to surpass 10 terabits in the next four or five years. The carrier has only 40 gigabits of bandwidth on the India-Europe leg of the busy SEA-ME-WE cable, which is operated by a consortium of 14 partners.

The new cable will also provide subsea connectivity to emerging markets in the Middle East and Africa.

Analyst firm TeleGeography Inc. expects to see growth rates in excess of 30 percent on the intra-Asia and India-Europe routes and predicts the intra-Asia route alone will need in excess of 400 gigabits of new capacity every year.

— Nicole Willing, Reporter, Light Reading

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