Cable & Wireless Communications PLC (CWC) says it has entered into a strategic alliance with Columbus Networks Ltd. to develop its international wholesale capacity business. Under the alliance, CWC and Columbus will form a joint venture in the pan-America region that will provide international wholesale capacity to both companies, as well as to third-party carriers.
The Latin America and Caribbean region has seen a surge in undersea fiber-optic cable network construction in recent years (see “New submarine cable systems target Latin America”). And with construction activity comes increasing levels of competition.
CWC and Columbus operate substantial and largely complementary subsea fiber-optic networks in the Caribbean and Central American region (see, for example, "Cable & Wireless Communications invests in East-West Caribbean cable" and "Columbus Networks upgrades ARCOS-1 with Xtera"). The joint venture will have a combined fiber-optic network of approximately 42,000 km with connectivity to 42 countries.
The alliance positions CWC to meet the data capacity demands of its retail operations in the future, as well as optimizing its use of capital expenditure on its undersea cable networks. Demand for data capacity is growing rapidly in this region, driven by the increasing availability of, and consumer demand for, mobile data and fixed broadband services.
The joint venture, which has just launched, will initially operate on an agency basis by providing joint sales and marketing services for each of CWC's and Columbus's international wholesale capacity services. Columbus has a 72.5% majority share in, and management control of, the joint venture and CWC has a 27.5% share with appropriate minority protections.
The partners plan to broaden their alliance within the next two years, with Columbus and CWC contributing their sub-sea and related assets into the joint venture company, subject to obtaining regulatory approvals and certain other conditions being met. Until then, Columbus and CWC will retain complete ownership and control of their respective existing networks in the region. Once the applicable approval requirements and conditions have been met, the joint venture will then assume ownership and management control of the international wholesale capacity operations of CWC and Columbus and all new investments in infrastructure will be made, and owned by it.
Cable & Wireless Communications Chief Executive Tony Rice said, "In a world in which demand for data is growing exponentially, bandwidth is absolutely crucial and for this reason we are delighted to be partnering with Columbus, an organisation with vast experience and capability, and an excellent sub-sea network. This joint venture aims to provide us with access to a secure, long-term supply of international data capacity to support our retail businesses in the pan-America region. It will also enable us to better monetize the excess capacity we have on our networks and in so doing offer high-capacity and resilient solutions to our customers. The alliance will put both CWC and Columbus in a strong position in the growing market for international wholesale capacity."
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