TEAMS submarine cable to land first in East Africa

NAIROBI, KENYA – A simple ownership structure, good financial backing and shorter distance has given the TEAMS submarine cable an advantage over EASSy and SEACOM, according to research by IDC.

TEAMS (The East African Marine System) has Kenyan government support, which will place it ahead of SEACOM in the race to secure the markets in Burundi, the Democratic Republic of Congo, Kenya, Rwanda, Tanzania and Uganda, said IDC regional manager Francis Hook.

IDC expects TEAMS to land in the first half of 2009 and SEACOM to land second to meet its deadline of June 29, 2009.

TEAMS and SEACOM are not encumbered by the complicated ownership structure and arguments over business model that characterize EASSy (Eastern Africa Submarine Cable System), the report stated.

While SEACOM has good financial backing, it may still need to clear further regulatory hurdles. SEACOM has already altered its ownership structure to meet the requirements of the South African government, which requires that cables placed in South Africa must have at least 65 percent South African or African ownership.

Regulatory issues in East Africa are still unclear, especially in countries with dominant government-owned operators that are signatories to EASSy. Telkom Kenya represents the government’s interests in EASSy, while Kenya Data Networks also has interests in it.

The report went on to analyze the ways in which countries are planning for the capacity to be carried through the cables. “Now is the time to start planning for this increase in capacity and the business transformations that will enable full utilization of the infrastructure,” the study noted.

Operators and governments are being driven to take advantage of the capacity as South Africa prepares for the 2010 FIFA World Cup. The data shows that Kenyan firms have already started positioning themselves strategically to take advantage of opportunities created by the cables. “An ecosystem is already evolving around cheaper broadband, as national and regional players compete based on license entitlements, business alliances, client base, financial muscle and regulatory environments,” Hook said.

As the competition heats up and prices fall, IDC has identified the companies to watch in the region as Access Kenya, Dimension Data, Econet Wireless, Industrial Promotion Services, Kenya Data Networks, Telkom Kenya, Vodafone/Safaricom and Zain. The companies have all heavily invested in one or more of the international cables. The study has also identified the business process outsourcing sector, value-added services and education as the likely beneficiaries of increased bandwidth and reduced prices.

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