Altech invests in East African cable
21 August 2009
South Africa's Allied Technologies (Altech) has acquired an 8.5% stake in The East Africa Marine System (Teams) fibre-optic cable through its subsidiary Kenya Data Networks for US$11-million (about R86.7-million).
Altech will use its cash reserves to fund a portion of the investment, which will also give Kenya Data Networks (KDN) a 10% voting right in the 5 000km, $130-million cable that runs along Africa's east coast, linking the Kenyan port city of Mombasa with Fujairah in the United Arab Emirates.
"Africa is in the infancy stages of a sustained growth trajectory in broadband across multiple technologies, services and geographies," Altech CEO Craig Venter said in a statement this week.
"The acquisition of a stake in Teams compliments KDN's strategy of being a cross-border, pan-African network operator."
According to Venter, shareholders in the Teams cable will be allocated cable capacity proportionate to their shareholding, thus giving KDN access to additional bandwidth and enabling the company to increase its range and quality of services.
KDN is currently the largest data network infrastructure player in the region, with terrestrial fibre laid in Kenya, Uganda and soon Rwanda, and the acquisition of the stake places the company in a good position to broaden its reach throughout Africa.
East African countries currently use satellite uplinks for their data needs, with the price for satellite connectivity at about $1 900 per Mbps per month. In contrast, the price of cable connectivity is expected to be about $90 per Mpbs per month, and decrease even further to $27 per Mbps per month by 2020.
Africa currently has less than one percent internet penetration compared to the USA's 60% penetration, according to Altech, and demand for broadband in the region is expected to increase at least 10-fold over the next three years.
"KDN's exposure to the opportunities Teams presents complements Altech's extensive data network and [internet service provider] operations in East Africa, and is a reflection of our expectation that there will be explosive growth in the demand for data services throughout the continent," said Venter.
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