Monday July 16, 2012
Boost in submarine cable capacity
By B.K. SIDHU
Time dotCom pushing to be serious alternative company that can compete with TM
PETALING JAYA: Time dotCom Bhd (TDC) is now involved in two major submarine cable projects with global partners that will help boost its submarine cable transit capacity to Japan, South Korea and the United States and pushes it to become a serious alternative player that is able to compete with incumbent Telekom Malaysia Bhd (TM).
Its recent move to join as consortium member of the Asia-Pacific Gateway (APG) - a decision it made within 45 days which is not the industry norm - gives it a complete land and sea fibre network footprint to capture the high growth bandwidth demand in Asia.
The APG cable originates from Malaysia to Japan and South Korea, thereby reducing Malaysia's dependence on Singapore as a main gateway for internet traffic to North Asia and the United States.
Apart from APG, TDC has ownership in the trans-Pacific Unity (in which Google is a consortium member) cable, running from Japan to the United States.
The APG project could also be TDC's platform to venture into the region and for TDC chief executive officer Afzal Abdul Rahim, the APG deal was “an opportunity that knocked on TDC's door.''
“Basically, we were approached by the consortium members and we are happy to invest as an exclusive Malaysian party.
“For us this is the highest capacity submarine cable that is being built to Japan and South Korea and it originates from Malaysia.
“We also get to build a landing station here,'' he said in an interview.
The cash outlay for TDC is only US$50mil while the total project cost is US$450mil.
“We have more than enough money to fund our portion of the investment.
“We may have RM100mil in debt but we also have RM1.3bil in cash and equivalents of which RM200mil is cash and the rest is in the form of shares in DiGi.Com Bhd that we hold.
“In essence we have an un-leveraged balance sheet,'' he said.
Afzal also could not say how much money the company will make when the cable capacity that TDC gets is leased out, but he did say that “it is a strategic asset and there is access to the US and other countries. To us, all this is about growing our regional business.''
“While it is difficult to talk about the returns (at this juncture), we should see revenues from the APG project after it is commercially available.
“The returns (can stretch over a period of) 50 years, so it is a worthwhile investment,'' he said.
APG is a 10,000-km international fibre optic cable system that will link Malaysia to South Korea and Japan with seven branches to other Asian countries.
The cable system is scheduled to be ready in the third quarter of 2014. Construction will begin in second half of 2012.
For its participation as a member it gets 10% capacity equivalent to four terabytes per second and that is considered ample capacity to make sure that there will be no bottlenecks when people surf the Internet for sites out of Malaysia, especially to Japan and South Korea.
But those in the know claim that TM was working on the project for nearly two years before TDC emerged.
They claim there were some disagreements that led TM to move on to work on other projects including Cahaya Malaysia, where it is laying a cable spanning 7,000 kilometres that will link Malaysia to Hong Kong and Japan. Hence, some of the consortium members could not wait and courted TDC.
When asked to comment, Afzal said “we thank TM for all its contributions in this project and we are looking forward to working with them on an equal footing.''
The APG consortium members includes global players such as China Mobile, China Telecom, China Unicom, Chunghwa Telecom, Facebook, Inc, KT Corporation, LG Uplus Corporation, NTT Communications, StarHub, Viettel Group, and Vietnam Posts and Telecommunications Group.