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Subsea Firm Azea Raises $20M

Light Reading
News Analysis
Light Reading
3/28/2007

Here's an encouraging sign for the once-beleaguered subsea market: Azea Networks Ltd. , a U.K.-based firm focused on upgrading capacity on submarine cable networks, has raised $20 million in Series D financing. (See Azea Secures $20M.)

The round was led by new investor TVM Capital and included previous investors Accel Partners , Atlas Venture , and Quester .

Scott White, Azea's CEO, says the company has raised $60 million since it launched in 2001. This latest round is intended for general corporate purposes and should take the company to profitability, "although we may choose to raise additional funds" to pursue specific opportunities, White adds.

Based on the outskirts of London, Azea employs around 50 people and provides terminal equipment, software, and a suite of network management services to large telecom carriers and subsea cable operators.

White says that in the submarine cable market, which includes the likes of Alcatel-Lucent (NYSE: ALU), Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY), and Tyco Electronics Ltd. (NYSE: TEL), "what's usually focused on is laying entirely new cables. What we focus on is going into existing cables... and putting in more capacity."

Azea's NX10 Submarine Line Terminal Equipment (SLTE), Element Manager, and Craft Terminal form a software-configurable DWDM system designed to increase capacity beyond the cable's original design limits by delivering multiple 10-Gbit/s channels over the legacy systems. (See Azea Launches Subsea System .) Using DWDM technology to stretch the lit capacity available on a cable is cheaper and more convenient than lighting dark fiber -- allowing carriers to upgrade cables one segment at a time with minimal disruption. (See Subsea Market Bubbles.)

Last year Azea announced it had been selected to upgrade the Hawaii segment of the Southern Cross Cable Network (SCCN), providing 20 Gbit/s in Phase I of the project and an additional 50 Gbit/s in Phase II. (See Azea Completes SCCN Upgrade.) Southern Cross Cables Ltd. , connecting Australia, New Zealand, Hawaii, and the U.S. West Coast, is owned by Telecom New Zealand Ltd. (NYSE: NZT; New Zealand: TEL), Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY), and Verizon Enterprise Solutions .

The company was also involved in a 2004 trial to upgrade Cable & Wireless Cayman Islands ' Cayman-Jamaica (CJFS) system in the Caribbean. (See C&W Boosts Capacity With Azea.) This week's $20 million funding follows a recent transoceanic upgrade with an unnamed customer.

In line with the larger demand for communications services, White says that the biggest growth areas for Azea are in the Asia/Pacific region. "The transatlantic is also seeing a lot of demand," he says, adding that, although the route isn't going to need new cables, "it's a very different market for upgrades" as individual operators see the need to increase their capacity. (See Lit Capacity Running Low on Subsea Routes.)

The submarine cable market has become increasingly active in recent months, with a string of carriers announcing upgrades and buildouts. (See TIC Expands Subsea Capacity, Xtera Wins at Faroese, FLAG Announces NGN, Carriers to Connect China With $500M Cable, Alcatel Signs €42M Subsea Deal, Asia Netcom Supports Tricom Cable, and VSNL Boosts Asia Subsea Capacity.)

— Nicole Willing, Reporter, Light Reading

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