African Subsea Cable Trends: Emerging Capacity Crunch & The Red Sea

- 2Africa is much more expensive than Equiano. The 2Africa 100G pricing is $25K and above excluding tails for Lisbon to Lagos. In contrast, Equiano 100G pricing is below $20K now. Similarly, Equiano 10G pricing gravitates around $5K versus $10K on the same route for 2Africa. 

The reason for this disparity is that the 144 Tbps Equiano cable primarily serves South Africa, Portugal, and Nigeria. In contrast, the 180 Tbps 2Africa network serves over 30 countries and Facebook kept 4 of the 16 pairs for itself. Note that the 2Africa map does not include the Pearls extension of 2Africa to the Persian Gulf, Pakistan, and Mumbai. 

Another sign of the impending capacity crunch is the unwillingness of 2Africa consortium members to sell IRUs. An IRU is a long term capacity sale ranging typically dffrom 10 years to life of system. Carriers will not sell IRUs if they expect future capacity shortages or think they are likely. Many of these carriers have transit backbones that they must keep running smoothly. That's their core business.

What should you do? Stock up on Equiano and 2Africa waves and spectrum because prices will begin rising within 2 years. Moreover, there is no relief on the horizon with no announced new projects. Furthermore, cable projects generally take 3 years or more to complete from the initial public disclosure of a Memorandum of Understanding. So even if a new cable were announced tomorrow, capacity would only come online in 2028 at the earliest. In fact, for complicated projects with many landings 4 or 5 years is more likely. The only generally discussed possibility at the moment is the rumored extension of Medusa to Africa's West Coast. However, the lack of any public announcements suggests Medusa is struggling to raise the capital. In fact, Medusa is struggling to get its own system up and running according to my African sources. I think investors will view Medusa skeptically in that light.

- The Red Sea is a disaster for African telecommunications and the trans-continental cables connecting Europe to India, the Middle East and Southeast Asia. The following cables cannot be completed as the situations stands today:

1. 2Africa.

2. Africa-1.

3. Blue Raman.

4. AAE2.

5. SMW6.

Discussions between the Houthis and Omanis to allow Red Sea construction and repairs broke down after an Israeli strike killed the Houthi leader this autumn. Trump's bombings have not helped.

Rumor has it that SMW6 is building a bypass route across Saudi Arabia. But the rest of the players (Google, TI, META, etc.) are engaging in typical corporate stonewalling regarding the subject. Contrary to what they think, frank discussion and open disclosure works better than corporate secrecy when dealing with matters affecting the public interest (sorry, consortium members, you are not the world). Corporate players that understand the benefits of open and frank disclosure are still far and few between.