The Hindu Business Line : Flag Telecom's $300 m submarine cable link project launch delayed

The Suez-Muscat-Mumbai stretch of the Flag Telecom's $ 300 million submarine cable link has been delayed by well over six months due to the inability of the Reliance Infocomm subsidiary to sign any supply contract with vendors till date.

The first phase of the Falcon submarine project was scheduled to be launched in February 2005.

Confirming the delay in commencing Falcon services, Ms Jane Windsor, Director, Communications, Flag Telecom, communicated to Business Line from London that the company still anticipated that the service would get started within 12 months of the supply contracts being signed. The 6,900-km loop between Suez and Mumbai via Muscat would now be completed only in the last quarter of 2005, she said.

"Although we have completed as much work as possible in parallel to these contract negotiations, each delay to the contracts being placed relates exactly to a delay in the date for RFS (ready for service). We have not yet announced a selected vendor to supply the system. However, we are in final negotiations with a shortlist of leading suppliers and hope to make an announcement shortly. We still anticipate that RFS will be within 12 months of supply contracts being agreed," Ms Windsor said.

When Falcon was announced in February 2004, it was said the system would be installed within 12 months. Then, it was Flag Telecom's expectation that contracts to be placed within the next two to three weeks. However, as of today no contracts have been placed mainly due to lengthy negotiations with vendors, it is learnt.

The delay has come even as the wholly-owned subsidiary of Reliance Infocomm has completed marine survey work on the Mumbai-Suez link and the route planning had commenced. The route planning would run parallel to contract negotiations so as to keep any RFS delay to an absolute minimum, Ms Windsor said.

Presently, Flag Telecom has three submarine optic fibre cable loops in operation with the Atlantic line that connects London with New York via Paris being the major one. The others include Flag Europe Asia that links 13 countries between London and Tokyo and the North Asian loop linking Hong Kong, Seoul, Tokyo and Taipei.

The Falcon project would provide an alternative link between Egypt and Hong Kong and in the bargain bring in the emerging markets of West Asia and India under the Flag umbrella.

It was in January last that Reliance Infocomm acquired 100 per cent stake in Flag Telecom for $211 million. The deal was inked with Reliance Gateway Net Ltd, a wholly owned subsidiary of Reliance Infocomm, in an all-cash deal, fetching Flag Telecom shareholders a price of $97.41 per share. Following this, Flag Telecom filed with the Securities and Exchange Commission (SEC) for delisting from the bourses.

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