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Networks & Infrastructure
First overland cable link ushers new era for India and China telecom
New deadline set for Bharti Airtel and MTN to complete merger deal
by Ek Heng, Asia-Pacific Correspondent
The first terrestrial high-bandwidth link commissioned between India and China marks a high point for two of the world’s largest telecom markets. India’s Reliance Communications collaborated with China Telecom for this overland 300 km cross-border cable link with a design capacity of 4.8 Tbit/s.
The China-India Cable System passes through the north eastern India city of Siliguri and Yadong in Tibet using the Nathula pass. It complements the submarine connections between two fastest growing economies and offers alternative cable route in the event of disruptions to the existing subsea network grid that are susceptible to natural disasters,
New link will benefit neighbouring countries
Commissioned earlier in August, the cable will benefit not just businesses in the two nations but also neighbouring countries such as Bhutan, Nepal, Sri Lanka, Pakistan and Bangladesh. In a separate development, for example, Nepal Telecom initiated measures in August to link with China Telecom near the Nepal-China border in Tatopani. The proposed link will replace the satellite link which is more expensive and does not provide the same quality of connection as terrestrial cable.
Marking the inauguration of the China-India cable link, Han YiHu, Managing Director of China Telecom said in a statement: “This announcement and cable connection is a landmark which represents many years of planning and hard work.”
Added Punit Garg, President, Reliance Communications: “India and China represent the largest growing economies in the world, and the current global economic environment requires ever increasing high-bandwidth, converged applications to be run between these markets.”
September deadline to seal merger deal
Meanwhile a new deadline has been set for India’s Bharti Airtel and South Africa’s MTN group to complete merger agreement that can potentially create a US $23 billion telecom entity. The revised deadline is the second, which is set for end September, and follows media reports about MTN’s request for an additional US $1 billion. The latest report by The Financial Express has Bharti Airtel offering US $13.1 in cash, instead of US $13 billion, with the balance in shares.
Apart from a hurdle regarding the composition of the new board of directors, the deal is complex with administrative and regulatory matters still to be finalised. However, the strongest indication of Bharti Airtel’s resoluteness lies in a report that it has lined up funding arrangement with a consortium of local and international banks for up to US $5 billion. The amount in preparation for the merger comprises the equivalent of US $1.5 billion in Indian rupee and US $3.5 billion.
SingTel may need US$3.5 billion to maintain stake
Singapore Telecommunications (SingTel), which has 30 percent stake in Bharti Airtel, may need to raise up to U$3.5 billion to maintain the same stake in the Indian telco after its merger with MTN, according to Singapore-based Channel News Asia.
It is understood that the negotiations if successful will give Bharti Airtel a 49 percent stake in the South African telco while MTN will acquire a 36 percent stake in the Indian telco.
Although India’s telecom sector still has room to grow, the intense competition in the horizon with new players starting up in the second half of this year, and declining average revenue per user, are putting pressure on established players to look beyond its national borders.
Pointing to the market prospects in Africa, MTN announced its 1H 2009 results showing a 30.6 percent increase in net profit to ZAR 9.09 billion (US$1.16 billion) on revenue of ZAR 57.27 billion (US $7.3 billion), an improvement of 24 percent for the same period from a year earlier.
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