The system will connect South America, Central America and the United States and will combine with Telefónica's terrestrial network to provide complete connectivity for all the principal Latin American cities, with links in the Pacific and Atlantic Oceans.
According to the Memorandum of Understanding (MOU) signed today, the two companies will form a joint venture which will be owned 75% by Telefónica Internacional and 25% by Tyco and managed by Telefónica Internacional.
The supply contract for the system will have an approximate value of US$900 million and has been awarded to Tyco Submarine Systems (TSSL). Additionally, significant technical upgrade enhancements are contemplated for the System and these upgrades will be provided and installed by TSSL.
Dennis Kozlowski, Chairman and CEO of Tyco International Ltd., stated that "This marks a new paradigm for undersea fiber optic networks as Tyco joins Telefónica in the infrastructure necessitated by the dynamic growth of the Internet. Our joint development of South and Central America Cable System will bring together the strengths of a world class carrier and the world's leading undersea systems supplier. We are extremely pleased to make our first major equity investment in global telecommunication network with Telefónica, the leading telecommunication operator in the Latin American market.
"In the past three weeks, Tyco signed six significant undersea fiber optic cable contracts with an estimated value in excess of $3 billion. In addition to SAm-I, these included: Hibernia, a $630 million Atlantic ring, with a potential for $800 million in system upgrades; a $600 to 800 million tranatlantic system with Level 3 Communications; and, South American Crossing, a $700 million contract with Global Crossing. These contracts add to a backlog in undersea projects that already exceeded $1.5 billion as of March 31, 1999," he added
"This cable system will be a key element in strengthening Telefónica's leadership in Latin America," said Antonio Viana-Baptista, CEO of Telefónica Internacional. "It will complement our existing network in the region and help us to grow in all the market sectors, including voice, data transmission and internet services, through our operators in Latin America. This is the kind of infrastructure that will widen our competitive advantage and allow us to better serve our clients needs in these areas."
We are truly pleased that we are announcing this project with TSSL, the world leader in undersea fiber optic networks, and with Tyco International as a partner," Viana-Baptista added.
"The South America and Central America regions are areas of the world that are currently under served by undersea fiber optic networks. The needs of these regions to access to the highest broadband connectivity supporting the explosion of the internet, data and voice traffic to be available is fundamental to the region's growth" comment Neil Garvey, President of TSSL. He continued that "We look forward to working with Telefónica a partner in the development of this important System."
SAm-I will be the first South American regional network utilizing Dense Wavelength Division Multiplexing (DWDM) technology, which offers more than 1.28 terabits/sec of undersea capacity on each segment.
The System is comprised of 23,000-kilometers undersea cable system that will utilize the most advanced fiber optic technology available. The System will connect the United States, Puerto Rico, Guatemala, Brazil and Argentina on the East Coast, and Chile, Peru, Colombia and Guatemala along the West Coast of South America. The first phase will be operational in December of 2000, allowing Telefónica to offer complete connectivity for all the principal Latin American cities. The full system is scheduled to be operational by July 2001, with further improvement in its capacity. Because it will offer the highest capacity system in South America, combined with Telefónica's existing terrestrial infrastructure, Sam-I will provide the lowest unit circuit cost in the region.
Sam-I provides a unique tool to Telefónica Group to consolidate and integrate its operations in South America and will be a key feature to differentiate its global offer of voice, data and IP services in one of the fastest growing markets in the world.
This project will allow Telefónica Group to increase its long distance voice and IP market share in the region as well as to strengthen its mobile and data ventures in the continent. Moreover, it will stimulate the increase in points of presence in those countries currently not covered.
Telefónica Internacional is the leading company in the Latin American telecommunications market. It is the overseas affiliate of Telefonica, the largest supplier of telecommunications services in the Spanish- and Portuguese-speaking world. With 2.906 trillion pesetas ($20.377 billion) in 1998 revenues, Telefónica is Spain's largest company in terms of profits, assets, market capitalization and employment. Through affiliate companies in Latin America, Europe and the United States, the Telefónica Group services a potential market of more than 530 million customers. As of December, 1998, the companies in the Telefónica Group had a total of 49 million customers in Spain and abroad. The Group manages 35.9 million fixed telephone lines and has 10.8 million cellular clients and 2.3 million pay TV customers. Of this total, Telefónica International manages 18.6 million basic telephone lines, 5.9 mobile phones and 2.0 million pay TV customers in Latin America.
Tyco Submarine Systems Ltd., a wholly owned subsidiary of Tyco International Ltd., is an independent supplier of undersea communications systems and services. TSSL owns and operates a fleet of world class cable ships for the installation and maintenance of undersea communication network systems. Leading edge fiber optic technology is provided by the internationally distinguished TSSL Labs located in Eatontown, New Jersey. The completely integrated manufacturing capabilities of TSSL are highlighted by cable, repeater and transmission equipment manufacturing facilities located in New Hampshire, New Jersey and Virginia. TSSL has combined these capabilities to successfully complete 85 undersea fiber optic networks, in excess of 350,000 kilometers of undersea cable connecting over 100 countries. For more information on TSSL or Tyco International Ltd. please visit the websites.
Tyco International Ltd., a diversified manufacturing and service company, is the world's largest manufacturer, installer, and provider of fire protection systems and electronic security services, the largest manufacturer and servicer of electrical and electronic components and underwater telecommunications systems, the largest manufacturer of flow control valves, and has strong leadership positions in disposable medical products and plastics and adhesives. The Company operates in more than 80 countries around the world and has expected fiscal 1999 revenues in excess of $22 billion.