Neotel casts anchor with Seacom

18 Mar 2009

South African newspaper Business Day reports that the country’s second national operator (SNO) Neotel has become the ‘anchor tenant’ on the Seacom international submarine cable, via a deal struck by its Indian parent, Tata Communications. Neotel has already invested at least ZAR20 million (USD2 million) in the project and will act as manager of the cable’s South African landing station in Mtunzini. That deal has now been substantially extended with Tata upping its investment in return for more bandwidth on the fibre-optic network. Tata, which owns 56% of Neotel, was the first major carrier to sign up for large-scale bandwidth on the undersea system, which is currently under construction, and has struck another deal to manage the cable, its billing systems and customer relations on behalf of Seacom. Tata will also land the cable at Mumbai in India and Marseilles in France. According to the report, the threat of Seacom’s arrival has already prompted South African incumbent Telkom to drop its own data fees by up to 80%. Seacom’s South African backers are Venfin, which has a 25% stake, investment house Shanduka Group (12.5%) and Convergence Partners (12.5%). Another 25% is owned by Kenya-based Industrial Promotion Services, an arm of the Aga Khan Fund for Economic Development, and the remaining 25% is owned by US-based Herakles Telecom.