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Seacom's current cable break that has all but left the undersea cable operator inoperable for a week, has raised market speculation that it may soon formalise alliances, if not an outright merger, with similar companies.
This week, Seacom's vulnerability as a single line operator was highlighted when a segment of its East African cable broke, leading to downtime of six to eight days.
Rumours that Seacom was looking at either forming a merger or formal alliance with Main One, the Nigerian-based private equity company whose cable stretching from Lagos to Portugal became operational last week, have been circulating for some time.
“This incident and the recent Telkom power outages show that there is still a need for more undersea cables,” says Arthur Goldstuck, MD of research company World Wide Worx. “Initially, there was a lot of resistance to Seacom from the other telecommunications operators, because Seacom is a private equity company and not a telco. However, Seacom now seems to have been accepted.”
Goldstuck says Seacom recently signed a redundancy agreement with Telkom and will probably do so with other operators, as is international practice. But it is hard to make a call yet on any kind of merger or takeover in the undersea cable sector.
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