Subsea Cables & Internet Infrastructure

EXA now owns the Aqua Comms assets. These include fibre pairs on AEC-1, AEC-2, and Amitié. EXA also acquired two Irish Sea cables as part of the purchase. EXA managment emphasizes customer choice in their justification of the deal, but I think what makes it a good deal for EXA is the price. It picked up lots of fibre pairs for a total price of around $40 million. Now subsea fibre IRU purchases often range from $30 million to $60 million per pair on life of system term deals. So this is a great distressed purchase. In the same ballpark as Columbia Venture's purchase of the 360 Networks for $25 million, which was rebranded as Hibernia Atlantic. I think the main question I would pose to EXA's operational staff is whether they can generate cost savings. Operational synergies are important to judging the success of an acquisition. This is where companies often fail in their consolidation efforts. GTT went bankrupt in 2021 after rapidly buying lots of network assets i...

I predicted a couple months ago that EXA was consolidating the Atlantic and would purchase Aqua Comms, which has been struggling, and whose estimated value was written down by its former owner, an infrastructure fund. An financial disclosure indicates that the buy price is a mere $54 million for all of Aqua Comms' assets. That $54 million includes the the four fibre pair AEC1, two fibre pairs on AEC2, which is a consortium project, and two Irish Sea cables. That's not very good. In fact, it is terrible. The price is probably 15% of of construction costs. It's a great contrarian EXA move because EXA can absorb the company's assets, but fire 99% of the employees. So the revenue should improve the bottom line. Aqua Comms illustrate how a lot of venture capitalists are bullish on telecom infrastructure without really understanding the challenges of making it successful (they should hire me for a lot of money to educate them). 😃 So what went wrong? Poor operational performa...

Besides Scylla  and Zeus , Crosslake's CrossChannel is the only other new English Channel cable built in the last 20 years. There was a 1998-2002 subsea construction boom and in wake of the subsequent capacity glut affecting the Atlantic and Europe, all further building ceased until the last 5 years. Scylla and CrossChannel are similar in many respects : unrepeatered 96 fibre pair double armoured cables owned by private operators as opposed to consortiums and both backed by infrastructure funds. The consortium model is less common in North America and Europe because there are fewer barriers to entry such as monopoly or semi-deregulated telecom markets. So including the incumbents in order to facilitate landing a subsea cable is unnecessary. It is interesting that all three cables are unrepeatered. Prior to their construction, most or all of the English Channel cables were low fibre count, repeatered networks. I suspect improvements in fibre purity and more importantly coherent opti...