Telebras moves away from Africa for undersea cables project, preferring Europe

Wednesday, February 5, 2014

The route to Europe has become the number one priority for Brazil in an intercontinental submarine network project to connect Brazil, the Southern Cone, the US, Europe and Africa, even though a first deal was signed with an Angolan telecoms consortium in 2011.

In a statement posted on its website on Tuesday (Feb 4), Brazilian state-run telco Telebras said that "the company's priority is the construction of an undersea cable linking Brazil to the European continent," due to "commercial and strategic issues."

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The telco reiterated that a partnership has been inked with Spain's IslaLink Submarine Cables and that the companies are now negotiating the formation of a JV with other Brazilian investors, to be created with majority national capital.

In fact, an MoU with IslaLink was inked in September 2012. It was only last January, though, that the companies "formalized" the deal and moved forward with the creation of the JV, which is expected for the coming months, after which time the cable construction will be able to begin. The construction work is expected to last 18 months.

Regarding the stretch connecting Brazil to Luanda, the capital of Angola, Telebras said in the statement that the partnership with Angola Cables involved only the offer of a landing point in Ceará state capital, Fortaleza - and not the formation of a joint company to manage its deployment.

The Telebras-Angola Cables deal is older than the Telebras-IslaLink one. And while the Brazilian company now claims it refers to "the offer of a landing point on Brazilian soil," that is not what was publicized over three years ago.

An initial agreement between Telebras and Angola Cables was signed in December 2011. At the time, Telebras said that the fiber optic structure would be ready by 1H14 and that the deal "formalized the interest of both companies to act jointly to launch the undersea cable linking Brazil to the African continent."

Four months later, in March 2012, Telebras and Angola Cables sealed a new deal, this time in the office of Brazil's communications minister Paulo Bernardo. On this occasion, Telebras again referred to it as "the joint construction of a submarine cable between Brazil and Angola".

In addition, when the intercontinental project was first announced, Telebras said the whole network was expected to comprise 24,000km of cabling when completed and that consortiums of private and public entities would be created for each of the branches - which included the route to Africa.

Since the signing of the deal with Angola Cables, the stretch was said to be the most advanced in the intercontinental underseas project.

But then the NSA espionage scandal broke out, and Brazilian government officials turned to Europe as its priority in the submarine project - which, as it now has become clear, has effectively not advanced since it was announced.

According to media reports, Angola Cables' president, António Nunes, publicly criticized Brazil by "giving up" the South American-African cable project. Telebras' "clarification note" on Tuesday (Feb 4) is said to be a response to Nunes' comments.

When contacted by BNamericas, a source within Telebras insisted that there was no formal deal inked with Angola Cables for the construction of the cable and that the partnership announced referred not to the creation of a joint venture, as in the IslaLink case, but to the offer of a landing point in Fortaleza.

The source, however, could not explain why Nunes had made these public statements, nor why past statements from Telebras had referred to the project as "joint construction."

The source only said that "talks did not advance."