French telecom major Alcatel is understood to have bagged a $400 million contract from Flag Telecom, the undersea cable company of Anil Ambani-controlled Reliance Communications.
The construction contract aims to build a fully Internet Protocol (IP) enabled Trans-pacific undersea cable with an approximate length of 11,000 kms. The Trans-Pacific Undersea Cable is a part of the expansion plans of Flag Telecom to add 50,000 kms of new Optic to its 65000 kms of undersea cable network across the globe.
RCom chairman Anil Ambani announced last year that Flag would invest over $1.5 billion for this cable link, named Next Generation Network. As part of the project, Flag is overlaying an all-IP enabled network and Data Centers to deliver advanced new-age services such as application and content delivery. The global market for enterprise and institutional data services is $ 90 billion.
The expansion programme would be funded through internal accruals, pre-sales, cash flows and external debt. Reliance Communications has cash reserves of over Rs 12,000 crore.
The cable will link Japan and West Coast of US. It will be seamlessly integrated with the other cable assets of FLAG Telecom including the existing FEA cable (Europe, Indian Sub-continent, East Asia), FLAG Atlantic (East Coast US to Europe), FLAG North Asia Loop, FALCON (Egypt - Middle East- India) and the forthcoming cables connecting Mediterranean, Africa and East Asian countries.
Earlier, Alcatel had built the $400 million Falcon Cable for the company, which was commissioned for commercial use in September 2006. When contacted, a Reliance Communication spokesperson confirmed the development.
There were market rumors that Flag is in talks with leading Carriers and Enterprises for Committed Capacities on a ‘Cable-in-Cable’ model, which provides a secure network to the buyer of the capacity. Search engine Google was in talks with the company to buy a significant Capacity on Flag Trans-Pacific Cable for its captive purposes.
Google was earlier planning to set up its own cable. However, a Flag spokesperson declined comment on such pre-sales discussions. ADA is planning to raise over $500 million through listing Flag Telecom in London Stock Exchange. The company is also planning for a pre-IPO private equity placement.