07 January 2013
Seaborn Networks’ submarine cable project, linking New York and São Paulo, is likely to involve export credit agency backing and development bank support.
With Jefferies & Company (New York & São Paulo) acting as equity advisers and Portland Advisers (London) as debt advisors, Seaborn Networks is well advanced on its $400 million project to build the first ever direct submarine cable between New York and São Paulo.
The project will be financed under a traditional project finance structure. It is believed that project debt may be provided with export credit agency backing and/or development bank support in light of significant interest expressed to date.
The company and its advisors would not comment on funding specifics other than to note that the project is on track for a financial close in the summer 2013. The cable is scheduled to be operational for Q1 2015.
The 100 Gigabit per second Seabras-1 system will be installed by Alcatel-Lucent Submarine Networks under a turnkey contract awarded by Seaborn Networks, which will own and operate the cable.
The cable will be 10,700km long, including a 350km branch to Fortaleza in Brazil, and permit acquisition and marine survey work have already been started by Alcatel-Lucent and Seaborn Networks.
“Our management team has a long history of working with Alcatel-Lucent on other submarine cable projects, and we believe Alcatel-Lucent’s industry-leading submarine technology is an invaluable tool to offer added-value and reliable services to our customers,” says Larry Schwartz, Seaborn Networks’ chief executive officer.
“Seabras-1 will be the first direct route between New York and São Paulo and also the longest 100G transoceanic link to date. Once deployed, it will contribute with other ongoing initiatives to enhance trans-continental connectivity, for the benefit of the global consumer and business community,” comments Philippe Dumont, president of Alcatel-Lucent Submarine Networks.
The cable will deliver new capacity on the main route for the majority of internet, data and voice traffic between South America and the rest of the world. It will also support a wide variety of consumer and business broadband services.
The attractiveness of the project from a financial standpoint is driven by the unique dynamics of the US-Brazil route, which is itself influenced by the unprecedented growth of the Brazilian telecom market in recent years. Recently released data by the Brazilian Electrical & Electronics Industry Association (ABINEE) underscores Brazil’s continuing telecom transformation. Operators invested BRL 17 billion ($8.2 billion) in Brazil’s telecom infrastructure between January and September 2012, which almost equals the total invested for all of 2011 (and 2011 was also a record setting year). This unprecedented growth is forecast to increase by an additional 7% in 2013.