By Amy Glass
Du investment in $700mn cable project to boost capacity, reliability - CEO.
UAE telecom Du’s investment in the Europe India Gateway (EIG) undersea cable system will prevent a re-occurrence of the major internet problems suffered in the Middle East earlier this year, the company's CEO said on Sunday.
Du last week announced it was part of a global consortium that would build a $700 million submarine cable system between India and the UK.
Europe India Gateway, a 15,000-kilometre, high-bandwidth optical-fibre system connecting 13 countries across three continents, will be constructed by a group of 16 global telecommunications firms and will carry video, data and voice traffic.
Speaking to local radio station Dubai Eye, Osman Sultan said the investment would offer Du more capacity and greater disaster recovery capability.
“One of the main reasons for Du to get into the consortium is to build resilience, and lose our dependence on Flag's Falcon cable, which is not enough [capacity] and makes us more fragile such as the case earlier this year,” Sultan told the radio station.
India's Flag Telecom owns two of the four cables that were damaged at the end of January, causing weeks of disruption to internet and international telecoms services across much of the Middle East and Asia.
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Du was particularly badly affected by the break in Flag's second cable, known as Falcon, off the UAE coast.
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Sultan said the new cables would be thicker in areas closer to shore to prevent a repeat of the disruption.
It is thought the breaks in three of the four cables, two intercontinental cables off the coast of Egypt and the falcon cable, were caused by a ship's anchor, while the fourth break, also off the UAE coast, was related to power supply problems.
Sultan said the new cable would provide a major capacity boost for Du, enough so that 4.5 million UAE resident could simultaneously make an international phone call, he said.
Need for greater internet bandwidth and international capacity was “increasing exponentially” as the UAE becomes a hub for business and people, so the cable investment was a long-term strategy, he said.
The cable will be put into service in the second quarter of 2010.
The total investment for Du is $50 million, including the construction of a landing station in Fujairah, rising to $65 million if necessary.
The project also has planned landings in the UK, Portugal, Gibraltar, Morocco, Monaco, France, Libya, Egypt, Saudi Arabia, Djibouti, Oman and India.
When asked why Du was making the investment when it had so far failed to report a profit from its core business of mobile and fixed-line subscribers in the UAE, Sultan said the cable would not impact profitability.
Du was on target to reach its first quarterly profit before the end of 2009, he added.
Last week Du said it boosted first-quarter revenue after adding mobile phone users and secured a 22% share of the market after 15 months of operation.
RELATED: Du stems losses, beats forecast
The company's loss in the three months to March 31 narrowed to 61.7 million dirhams ($16.8 million) compared to a loss of 215.85 million dirhams in the year-earlier period.