After losing its bid for a stake in South African government-owned telecom network operator Infraco, Tata-controlled Videsh Sanchar Nigam Ltd is planning to invest in the submarine cable projects of the state-owned entity.
VSNL may invest close to $200 million for the cable project, group sources said.
"Currently, it is in the very early stages of negotiations. Just now, they came out with an idea of inviting partners for the submarine projects. We are interested in partnering in that," a top company official said.
Infraco, South Africa's third network operator, which has been formed to lower the broadband costs, is planning to invest close $700 million to build an undersea cable network. The cable network will connect Africa, America and Europe.
"VSNL has a stake in SA's second national operator, Neotel. Now the company is interested in equity participation in the undersea cable projects of Infraco," sources said.
The South African telecom regulator has invited strategic partners to invest in the submarine cable project. Infraco aims to set up its own undersea cable to meet future broadband demands and enable a lowering of broadband costs. The project is expected to be completed by the end of 2009.
"Since VSNL has its own undersea cable projects across the globe, it would be a better idea to have an equity participation in Infraco's cable project," a Tata official said.
Currently, the Tata group, through VSNL and Tata Africa, has a 26 per cent holding in South Africa's second national telecoms operator, Neotel.
Neotel currently carries international voice services for the mobile operators, and provides global Internet transit for major Internet service providers from its international point of presence in Johannesburg. Infraco plans to lease its network between the country's main cities to Neotel.
VSNL is working on the construction of a new submarine cable linking India, the Middle East and western Europe. The company plans to invest close to $500 million for its expansion programme in the current financial year.