Altech powers into Africa

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 21 Aug 2009

Altech is now the second-largest holder of bandwidth in Africa after Telkom, claimed Altech CEO Craig Venter yesterday.

In April, Venter told ITWeb that Altech had concluded a deal to buy an 11% stake in The East African Marine System (Teams), an undersea cable that stretches from Mombasa to the United Arab Emirates, with links to the Far East and Europe.

However, according to the final details of the deal, the size of the stake is actually 8.5%.

Yesterday, Venter disclosed that the transaction cost $11 million (R87.5 million) for an 8.5% stake in the cable, but with an effective voting right of 10%, allowing Altech to appoint a director to the Teams board. The stake will be managed through Altech's East African subsidiary Kenya Data Networks (KDN).

Venter says Altech will also announce a strategic alliance with another East Coast cable operator, Seacom, within the coming weeks.

He says Altech has invested R650 million in its East African operations and now has interests in five countries there: Kenya, Rwanda, the Democratic Republic of Congo and Tanzania.

“We have built a terrestrial fibre-optic link between Mombasa and Kampala of 1 500km, and this brings our total network to about 4 000km of cable in the region,” he notes.

Growth engine

Venter says clients currently using the Altech network include almost all the major mobile network operators, such as Zain, Celtel and Safaricom.

As part of Altech's strategy, it has bought 51% stakes in other East African telecoms operators such as Infocom, in Uganda.

“Africa will definitely be a growth engine for Altech in the coming years. While we have good businesses in SA, the growth will come from Africa where Internet penetration is just 1%. I believe that growth in the region will be explosive and emulate the growth rates seen when cellular arrived,” Venter says.

KDN, which is 60.8% held by Altech, is a 'carrier-of-carriers' telecommunications operator and Internet service provider, with fibre and radio infrastructure throughout East Africa.

Price drops

According to an Altech statement, KDN was the first company to construct a termination point on the Kenyan coast in anticipation of the landing of East Africa's three international undersea cables.

KDN's fibre-optic cable will connect the undersea cables that land in Mombasa to the rest of East Africa, creating a five-country fibre-optic-based terrestrial network linking Kenya, Tanzania, Uganda, Rwanda and the DRC.

The $130 million, 5 000km Teams undersea fibre-optic cable project is spearheaded by the Kenyan government. It stretches from the coastal towns of Mombasa (Kenya) to Fujairah (United Arab Emirates). The initiative will facilitate East African connectivity to international communication networks, providing bandwidth at lower prices and creating an East African broadband network, where currently costly satellite technology is used.

Altech says the price for satellite connectivity in the region is $1 900 per Mbps per month, whereas the expected price for submarine cable connectivity will drop dramatically to $90 per Mbps per month. This cost is expected to decline further, to $27 per Mbps per month by 2020.