Brief Overview November 2008 Proprietary and Confidential 1
Delivery Deadlines Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing SEACOM owns & operates a high capacity undersea cable linking Africa to Europe and Asia via the Middle East Overview SEACOM Topography n State of the art, privately funded, submarine fiber optic cable that we will own and operate n Enormous capacity of 1. 28 Tb/s will enable Africans to enjoy high demand services such as HDTV, IPTV, true broadband Internet and peerto-peer networks n +/- 17 000 km route will link South Africa to Mumbai in India and Marseille in France via Mozambique, Madagascar, Kenya, Tanzania and Ethiopia (undersea portion > 13, 500 kms) n Internet and IP solutions as well as global onward connectivity for voice and private line solutions Proprietary and Confidential 2
Delivery Deadlines Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing SEACOM is an African project with majority African ownership… that separates ownership from use of capacity 76. 25% African Industrial Promotion Services – 26. 25% Venfin – 25% Convergence Partners – 12. 5% Shanduka – 12. 5% • • 23. 75% International Herakles Telecom Not a national telecommunications operator Strategic value add Sector knowledge and relationships Financial backing - Proven access to equity and debt funding • Venture/Seed Capital • Mega-Project Developers • Management expertise n Fully funded - Project debt provided by Nedbank Capital and Investec Bank Proprietary and Confidential 3
Delivery Deadlines Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing SEACOM is under-construction, having sped to market specifically to support the growing bandwidth demand leading up to 2010 SEACOM is financially closed project, and will be the first to complete construction on the eastern route to Europe. § June 2009 ready for commercial service § Fully funded – Debt & Equity § Marine Survey work completed from South Africa to Kenya § Construction phase initiated with manufacturing of cable & repeaters in November 2007 § Telecom Egypt: Alcatel Turnkey Construction Contract in force § Environmental Approval Activities initiated Proprietary and Confidential 4
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing Poverty alleviation requires growth of the local economy through prosperity in all industry sectors of local trade and export Undersea cables reduces the cost of doing business, allows new industries to emerge and diverts investment into local communications infrastructure Increased Business Productivity Increased New industries: BPO, Global Intl Call Centres, & etc. . . Demand Reduces cost of Doing Business Cost Competitive Economy Increased Employment Poverty Alleviation Cycle Infrastructure Development: Diverts investment Water, into local network Electricity, Transport & Proprietary and Confidential Communications Economic Growth Increased Government Revenues 5
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing For the first time, Africa can participate in collaborative global distance learning initiatives that exchange real time bandwidth intensive voice & video Proprietary and Confidential 6
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing Information, specifically Educational content is freely available. The use of such courses requires intensive bandwidth, but offers tremendous social benefits Massachusetts Institute of Technology n 1800 Courses made available free n In three languages n Presented in Audio and Video format n World leading Institution MIT Proprietary and Confidential 7
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing Africa can now make use of bandwidth intensive remote services, such as Tele-Medicine, and additionally become a supplier of Tele-Medicine services Proprietary and Confidential 8
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing SEACOM has reduced the cost of international bandwidth for Universities and Research Institutions by 5 000% in South Africa SEACOM’s commitment to participating in the development of the continent is unprecedented • SEACOM is providing 40 universities, education and research institutions in South Africa with 50 times more bandwidth at the same price currently being paid annually to Telkom • …further more, after six years, the institutions will own the capacity for the remaining life of the cable resulting in annual savings to the institutions • The bandwidth that the institutions will enjoy, is almost equal to that currently available to the entire South African population Picture Primary & Secondary Research Data Exchange Education Initiatives • South Africa can host research facilities in which primary data if significant size is distributed to the rest of the world for analysis. • SEACOM has extended the below cost bandwidth offer to the alliance of Southern and Eastern African Universities called u. Bhuntu. Net. • Radio Astronomy • Distance Learning Initiatives will allow virtual classrooms between Africa, Europe and India. • Karoo Array Telescope • Square Kilometre Array • South Africa can source primary research data from large international projects and conduct secondary research analysis • South African universities can offer distance learning classes to students at universities in neighbouring countries. Proprietary and Confidential 9
Services & Pricing Deliver y Deadlin es Bandwi dth Market Service s& Pricing Broadb and on Deman d SEACOM will ensure affordable open access & interconnect to all operators within the cable landing station… SEACOM Landing Station Layout • SEACOM will construct three buildings at the landing station • Building # 1 - receive submarine cable and interconnect to backhaul to Johannesburg • Building # 2 - Ancillary station: power back up, air conditioning etc. • Building # 3 - Open co-location to ensure open access, the station will be outfitted with direct interconnect to the submarine fibre optic network • The building will be declared an Essential Facility. • Only operating costs of the co-location building i. e. electricity, air-conditioning etc… will be used to determine colocation costs • SEACOM’s ensures that all carriers have open and equal access to the submarine fibre cable Proprietary and Confidential 10
Broadband on Demand Deliver y Deadlin es Bandwi dth Market Service s& Pricing Broadb and on Deman d SEACOM’s market strategy is to develop a high volume, low cost market which will encourage new industries to emerge, stimulating further demand The South African Minister of Trade & Industry stated that high cost of Telecommunications was an inhibitor to call centre industry growth. . . A minimum of 30 to 35 Gbs to support desired BPO and Call Centre industries Proprietary and Confidential 11
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing Internet and international communications costs contains a large portion paid for satellite or international circuits. . . SEACOM Pricing Benefits Reduced Communications Costs n SEACOM offers packaged and complete services all the way to London n SEACOM pricing is 90% less than current fibre pricing. International Circuit n SEACOM pricing, at worst is $117 vs. $3000 for Satellite n SEACOM pricing includes co-location, & interconnection, and discounted onward connectivity n SEACOM’s price reduction results in significant savings: • That could be discounts to customers • Or re-invested in local infrastructure Proprietary and Confidential 12
Broadband on Demand Deliver y Deadlin es Bandwi dth Market Service s& Pricing Broadb and on Deman d SEACOM’s concept of Broadband on Demand to operators is a risk free, always upgradeable capacity purchase which is a direct & recoverable cost Operators Want: SEACOM Offers: n Operators want to focus on core national business, on value adding services, and move away from risky infrastructure investments n Operators want to be treated as customers… n Operators want to avoid collaboration in large committees for capacity upgrades decisions n Operators want packaged solutions for internet and ongoing connectivity n Simple Capacity Purchases – Zero Construction and Management Risk n A professional service with Service Levels and Penalties n Packaged solutions of co-location, interconnect and internet or ongoing connections n Removal of Bottlenecks: Termination in Johannesburg n The Future is IP with standard high capacity interfaces and burst-able solutions Proprietary and Confidential 13
SEACOM is the required real and tangible driver for lowering the cost of communications and stimulating market growth at all points in the value chain SEACOM, Real and Tangible Partnering and addressing the needs of bandwidth hungry African economies Removing national and international infrastructure bottleneck Facilitating research & education through sub-costs bandwidth Proprietary and Confidential Supporting the east and southern African economic growth by significantly lowering communications costs 14
BACKUP Proprietary and Confidential 15
In addition to providing an update on timing, this will share insights in market growth and SEACOM’s services & pricing Delivery Deadlines Bandwidth Market Services & Pricing Proprietary and Confidential Broadband on Demand 16
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing File sharing, and streaming video are changing the way the Internet is used - enhancing the capabilities of the Internet but also requiring HUGE amounts of bandwidth Music sharing programs like Apples ITunes now accounts for 60% of all Internet traffic; further, the sharing continues 24 hours a day and has collapsed the concept of bandwidth management control The founders of Skype are now launching a video sharing platform, where anyone in the World can stream video from another computer anywhere in the world Enabling Access to Web 2. 0 Content Streaming Video is converting into IPTV is expected to be the largest consumer of bandwidth by 2011 Proprietary and Confidential 17
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing US Television draws 8. 5 to 15 million viewers per day, while You. Tube has 100 Million views per day. . . Africa will access the same content through SEACOM American Idols this year had 27. 9 million viewers in a single broadcast and in one single advertising event while the most viewed movie on You. Tube has 75 million views § IBM reports that typical viewers are spending equal amounts of time on the Internet as with TV § Selected Content. . . Says much about preferences to marketers § Cost of operating a You. Tube much lower, content is not developed by You. Tube § Who do you spend you marketing budget with? At such a low cost can you afford to not spend at You. Tube Proprietary and Confidential 18
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing The demand for international capacity from South Africa’s broadband segment is set to outstrip demand by traditional voice and leased lines Subscriber Growth Access Technology • New customers are subscribing for ADSL, 3 G and broadband wireless services at a tremendous rate • SEACOM conservative model uses a 35% growth rate • Last mile technologies have been developed with capacities of 20 Mbs and beyond • SA has introduced 4 Mbs ADSL, and 3. 6 Mbs HSDPA Impact of access technology and contention ratio on market size (Gb/s) 400 350 300 250 200 150 100 50 2004 Wireless Subscribers 2005 2006 2007 Wired 2009 2008 Subscibers 2010 2011 Contention Ratio Wireline Wireless New Technology 2004 - 2006 • Initially, operators will compete via price and coverage to grow the subscriber base as fast as possible • Mature competitors will start improving Contention Ratios to improve the quality of service and reduce churn Developments ADSL 384, Contention 100: 1 3 G, 384 Contention 100: 1 New Technology 2007 ADSL 1024, Contention 100: 1 HSDPA 1. 8 Mbs Contention 100: 1 Improved Service 2009 ADSL 4096, Contention 50: 1 HSDPA 1. 8 Mbs Contention 50: 1 Improved Service 2010 ADSL 4096, Contention 20: 1 HSDPA 1. 8 Mbs Contention 20: 1 Proprietary and Confidential 19
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing The relevance and importance of international communications should not be restrained by the “Limits of our Imagination” such as the initial forecasts for mobile communications in Africa GSM Forecasts vs. Actual Broadband Forecasts 400 350 300 250 200 150 100 50 2004 n Original Mobile Forecasts were based on number of fixed line users n Expected 10 Million users in all Africa after 10 years n Currently at 225 Million users Wireless Subscribers 2008 Subscibers Wired 2009 2005 2006 2007 2010 2011 n Assumes conservative user growth of 35% per annum n Assumes no new introduction of technology at ADSL 4096, HSDPA 1. 8 Mbs n Assumes contention ratio of 20: 1 n Demand will grow from 10 Gbs to 350 Gbs Proprietary and Confidential 20
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing This change in the Internet drives the global demand for new submarine fibre optic cables. . . Despite construction capacity shortages, SEACOM’s RFCS is guaranteed Last mile networks such as 3 G mobile and Wi. Max are increasing the demand on the Internet every day, 60% of new demand is from the music sharing, video streaming and 3 D Internet • 2 new China to US cable (6 Terabit each) • 1 new Japan to US Cable • 2 new India to Far East (4 Terabit each) • 1 new Australia to Guam Cable • 1 new Europe to Iceland Cable • 4 new cables from India to Europe Proprietary and Confidential 21
Services & Pricing Deliver y Deadlin es Bandwi dth Market Service s& Pricing Broadb and on Deman d SEACOM’s Undersea fiber optic cable system offers Intra. Africa ring connectivity, as well as direct connectivity to Europe and Asia Network Schematic Design Information § Dual fiber pairs service Kenya, Tanzania, Mozambique and Madagascar § In the event of damage to the Mediterranean portion of the cable, the system can be switched in Egypt onto one of several other cables through the Mediterranean. Proprietary and Confidential 22
Services & Pricing Deliver y Deadlin es Bandwi dth Market Service s& Pricing Broadb and on Deman d SEACOM has addressed the concerns about affordable South African terminations & Backhaul and also provides international terminations over a global network South African Network Topography § Open-Access landing station for the SEACOM Cable in Mtunzini § Backhaul bundled into the SEACOM pricing § SEACOM offers customised onward connectivity to anywhere in the world Proprietary and Confidential 23
Services & Pricing Deliver y Deadlin es Bandwi dth Market Service s& Pricing Broadb and on Deman d SEACOM’s comprehensive service offering includes IRU pricing at ~ 80% discount of current lease prices on SAT-3 Volume Discounts Competitive Pricing Equivalent Mbs per Month Product Equivalent STM-1 (Pre-RFCS) $ / Mbs / month Satellite $5000 - $1000 STM-1 $4 350 000 $117 Telkom / SAT 3 (JHB/CPT to beach) $1375 - $500 STM-4 $3 697 500 $99 EASSy (from the beach to Sudan) $200 STM-16 $2 773 125 $75 Seacom (Po. P to Po. P) $45 STM-64 $1 663 875 $45 Solution Indefeasible Rights of Use (IRU) Service § Equivalent to ownership for the remaining life of cable (~20 years) § Can be used as security, or otherwise treated as physically owned asset § Ideal solution for large operators with long term bandwidth demands, and having capital to take advantage of volume discounts Int’l Private Leased Circuit (IPLC) Service § 3, 4 or 5 year lease product § SEACOM offers competitive and flexible lease pricing § Ideal solution for smaller operators with uncertain future bandwidth demands, wanting to avoid large upfront expense of the IRU Proprietary and Confidential 24
Services & Pricing Deliver y Deadlin es Bandwi dth Market Service s& Pricing Broadb and on Deman d RFCS prices will be significantly lower that the current market price but additionally, SEACOM further discounts pre-RFCS purchases SEACOM pricing maintains the current wholesale market structures Pre-Jan 2009 Cost per Megabit per month Cost per STM-1 (155 Mbs) $117 $4 350 000 STM-4 (622 Mbs) $99 $3 697 500 STM-16 (2. 5 Gbs) $75 $2 773 125 STM-64 (10 Gbs) $45 $1 663 875 Post-Jan 2009 Cost per Megabit per month Cost per STM-1 (155 Mbs) $134 $5 000 STM-4 (622 Mbs) $114 $4 250 000 STM-16 (2. 5 Gbs) $86 $3 187 500 STM-64 (10 Gbs) $51 $1 912 500 Proprietary and Confidential 25
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing India serves as the case in point, after public investment and facilitation of key components of economic growth, India is respected as an example to aspire towards Infrastructure Benefits Outsourcing Market ICT Parks • Development of local and international content • Business Process Outsourcing Academic Infrastructure • Affordable, skilled labour Culture of Entrepreneurship • Risk taking and initiative Affordable Communications Outsourcing Market • International Call Centres • Competitive access to Multiple International Telecoms Cables Proprietary and Confidential 26
Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing The latency on the SEACOM system of 76 msec is significantly better than satellite’s of 300 msec SAT-3: Melkkbosstrand to Sesimbra = 60 msec Satellite: = 300 msec SEACOM: Mtunzini to Marseille = 76 msec SEACOM: Dar Es Salaam to Marseille 51 msec Proprietary and Confidential 27
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing The evolution of the Internet is going to 3 D, Second life is a 3 D social networking site on which over $1 million worth of transactions take place everyday The Gartner Research Group estimates that 2. 7 billion people will be on social networking sites such as Second Life by 2010. To work, 3 D streaming requires high capacity IP networks • Successful technologies operate in harmony with the human spirit • The following institutions are using Second Life to communicate to the public: • The German Parliament streams every session on Second Life • IBM does factory tours on Second Life • Toyota has virtual test drives on Second Life • ABN AMBRO does retirement planning on Second Life • Some major Universities are moving virtual education to Second Life Enabling Access to Web 2. 0 Content Proprietary and Confidential 28
Bandwidth Market Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing Today’s broadband users have to cope with poor contention ratios when accessing international content Contention Ratios and the Broadband User § There approximately 1 million broadband end users in SA (DSL and 3 G) with an average access rate of ~0. 5 Megabit per second: § A 1: 1 contention ratio would require 500 Gbs of international capacity from SA § A 20 to 1 contention ratio would require 25 Gigabits per second of international capacity for SA § However, it is estimated that SA utilizes 10 Gigabits per second for broadband end users resulting in a 50: 1 contention ratio § Future demand will be pushed by: § Growing broadband subscribers § Faster access rates through improved technology § Lower contention ratios driven by market competition Contention Ratios and the Broadband User South Africa Today 1 million users, 1 Mbs each Proprietary and Confidential 50 Gbs Required to Europe Current size, 10 Gbs Ideal Contention Ratio of 20: 1, Actual Contention Ratio is 50: 1 29
TANZANIA SPECIFIC Proprietary and Confidential 30
Services & Pricing Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing SEACOM guarantees affordable Tanzanian terminations and provides international terminations over a global network South African Network Topography § SEACOM Tz will make available an Open-Access landing station for the SEACOM Cable at Silver Sands § Backhaul will be made available to clients through national carriers § SEACOM offers customised onward connectivity to anywhere in the world Proprietary and Confidential 31
KENYA SPECIFIC Proprietary and Confidential 32
Services & Pricing Deliver y Deadlin es Bandwi dth Market Broadb and on Deman d Service s& Pricing SEACOM guarantees affordable Tanzanian terminations and provides international terminations over a global network South African Network Topography § SEACOM Ke will make available an Open-Access landing station for the SEACOM Cable in Mombasa § Backhaul will be made available to clients through national carriers § SEACOM offers customised onward connectivity to anywhere in the world Proprietary and Confidential 33
MOZAMBIQUE SPECIFIC Proprietary and Confidential 34
SEACOM guarantees affordable Mozambique terminations and provides international terminations over a global network Mozambique Network Topography § An Open-Access landing station for the SEACOM Cable is based at Maputo § Backhaul will be made available to clients through national carriers § SEACOM offers customised onward connectivity to anywhere in the world Proprietary and Confidential 35
STAKEHOLDER SLIDES Proprietary and Confidential 36
SEACOM’s diverse route across Egypt makes the cable more reliable than others Proprietary and Confidential 37
Proprietary and Confidential 38
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