EASSy Cable

completed

The East African Submarine Cable System (EASSy) is an initiative to construct and operate a submarine fiber optic cable along the east coast of Africa to connect eight coastal countries and island nations to each other and to the rest of the world (the Project). The cable will have an initial equipped capacity of 20Gbits/sec, and an ultimate capacity when fully upgraded of 320Gbits/sec. The route will be from South Africa to Sudan, covering about 8,500 km, and connecting the following countries: South Africa, Mozambique, Madagascar, Tanzania, Kenya, Somalia, Djibouti and Sudan. Twenty-eight leading telecommunications operators (the Operators) from East and Southern Africa signed a Memorandum of Understanding (MOU) in December 2003 to carry out the construction and maintenance of EASSy. EASSy will be the first optical fiber connection for most of these countries to the global optical fiber network. In separate projects, EASSy signatories are working on the development of terrestrial backhaul connections to link land-locked countries of the region to the cable (including Botswana, Burundi, Ethiopia, Lesotho, Malawi, Rwanda, Uganda, Zambia and Zimbabwe).The Hybrid Model for the financing and ownership of EASSy is composed of two parts:- a Special Purpose Vehicle (the SPV), which will receive funding from the private-sector arms of the involved DFIs, including IFC, to create a commercially viable structure which meets open access policy objectives as well as supporting some operators (the SPV Operators) to fund their investment in the Project; and - a Consortium, which will be composed of those operators (the Consortium Operators) that elect not to join the SPV and, instead, make direct investments in the EASSy cable. The SPV has recently been incorporated in Mauritius with the name of West Indian Ocean Cable Company Ltd. It will be majority owned by the SPV Operators. The SPV will have its own by-laws, Board of Directors and professional management team. It will function as a commercial entity which will manage, market and sell or lease its capacity to SPV Operators and any other authorized third parties. IFC has been asked to provide financing to the SPV, along with five other DFIs including EIB, AfDB, DBSA, AFD/Proparco, and KfW. The funds will be used to finance that share of the Project cost resulting from the projected capacity requirements of the SPV Operators (the SPV Project Cost), as well as certain preparation and start-up expenses. The SPV Project Cost will ultimately depend on the composition of the SPV, which has yet to be finalized; however, in the current scenario which assumes 14 SPV Operators, the SPV project cost is approximately $120 million.