West African Cable System signs financing agreement
The long-awaited construction and maintenance agreement, to build the $640 million West African Cable System (WACS), was signed last Wednesday at Vodacom's head office, in Johannesburg.
The signing of the agreement has been put off several times already, with the last scheduled date having been 11 March. A contractor to construct the cable also has not been formally announced, although it is expected to be Alcatel-Lucent.
WACS grew out of the need to replace the Telkom-controlled SAT-3 cable, which is running out of capacity, and to break the telecommunications company's grip on international connectivity.
The new system will operate on open access and non-discriminatory pricing principles but it will be a traditional type of telecoms shareholder model linking capacity to the amount of money each company puts in.
“A big difference from the SAT-3 model is that, while the shareholders will build and operate the landing stations in their own countries, they will have to give other shareholders equal access. So the 'key-to-the-door' situation, as we have with Telkom, will not exist,” a source says.
WACS shareholders are Telkom, Vodacom, MTN, Broadband Infraco and Neotel from SA. Telecoms companies from Namibia, Botswana and Angola will also have stakes, as will Vodafone (Spain) and British-owned Cable & Wireless.
It is believed the cable has been oversubscribed, with last minute attempts made - as late as the day before the signing - by potential investors that were rejected.
Sources close to the project say that it will be completed by the end of 2010 and that existing cables will be able to handle anticipated demand during the World Cup.