Seaborn Networks Completes Total Funding for Seabras-1 & Signs Deal with TI Sparkle

Seaborn Networks announced the completion of its US$500 million project funding for Seabras-1, a new transoceanic subsea fiber optic cable system directly connecting points of presence (POPs) in New York City (US) and São Paulo (Brazil). All conditions to this project financing have been fully satisfied; debt and equity funds have been drawn.

Figure 6 - Seabras Cable Map

Source: Seaborn

Seabras-1, owned jointly by Seaborn and global private markets investment manager Partners Group, uses next-generation coherent technology to deliver high-capacity and low latency telecommunications for one of the fastest-growing transoceanic routes in the world. This six-fiber pair system with initial maximum design capacity of 72 Tbit/s is the first system to provide a direct point-to-point route between the commercial and financial centers of the United States and Brazil. Seabras-1 also includes branching units installed on certain of its fiber pairs that point towards Halifax (Canada), Ashburn (US), Miami (US), St. Croix (US), Fortaleza (Brazil), Rio de Janeiro (Brazil), and Las Toninas (Argentina).

Seaborn-managed Seabras-1 offers a wide range of capacity options (including lit, spectrum, and portions of fiber pairs) for POP-to-POP service on the New York to São Paulo route.

Full project equity capital was provided by Partners Group and development capital was provided by Seaborn. The project funding also includes total project debt of up to US$267 million provided by Natixis, Banco Santander, Commerzbank and Intesa Sanpaolo, which debt is backed by COFACE, the French Export Credit Agency.

"We are extremely pleased to announce that Seabras-1 is fully funded and that manufacturing of this system is ongoing," said Larry Schwartz, Chairman & CEO of Seaborn Networks. "As global telecommunications demands continue to grow, we are determined to offer the most compelling range of alternatives for purchasers of international broadband capacity."

"Seabras-1 is a key telecommunications infrastructure project for the Americas and will bring tangible benefits to businesses and individuals in Brazil and neighboring countries," stated Todd Bright, Managing Director and Head of Americas Private Infrastructure at Partners Group.

Alcatel-Lucent Submarine Networks, now part of Nokia, is currently constructing Seabras-1 for Seaborn under a contract in force. Diverse, dark fiber backhaul and metro routes at each end of the system have been fully secured. Manufacturing of the Seabras-1 system is in progress, and the committed ready-for-service date is in the second quarter of 2017.

In the 165-year history of the subsea communications cable industry, Seabras-1 represents the first export credit agency-backed project financing of a subsea cable system.

At the same time, Seaborn announced that TI Sparkle, the International Services arm of Telecom Italia Group, has made a long term investment of over US$300 million for the realization of a new network system based on three fiber pairs out of the total six pairs composing Seabras-1.

In addition to the three express fiber pairs connecting Wall, New Jersey, US, to Praia Grande, Brazil, TI Sparkle’s investment includes a Branch Unit in Fortaleza, Brazil and a protected backhaul between New York and Miami to connect Seabras-1 to existing proprietary infrastructure, thus ensuring full network resiliency with top service quality.

“Seabras is one of the largest one-time infrastructural investment made by Sparkle”, says Alessandro Talotta, Chairman and CEO of TI Sparkle, “which will make us by far leader in the Americas wholesale market supported by the largest, most advanced and reliable network in the Region. We are witnessing a surge of high capacity deals and with this latest investment we are fullly able to cater to this new demand, typically coming from OTTs and Content Providers”, continues Alessandro Talotta. “Last but not least, with Seabras we are able to hold onto our top ranking position as best IP quality route between North and South America for quite some time and continue to satisfy the lower latency needs of specific segments like financial institutions and the gaming industry by providing a private IP connection type of quality on the public internet”, concludes Talotta.

“We are very pleased to further enhance our long-term relationship with Sparkle as part of our deployment of Seabras-1”, says Larry Schwartz, Chairman and CEO of Seaborn Networks. “This new system, on one of the world’s most important transoceanic routes, will help to accelerate broadband development for Brazil and other South American countries.” Through Seabras-1 and the backhaul extensions from cable landing points to main PoPs in New York and Sao Paulo, TI Sparkle will also provide easy onward connectivity to rest of world since the New York metropolitan area is an international gateway to Europe, the Middle East and Africa via trans-Atlantic cables, and will enable high speed routes to the West coast of the US to connect to Asia via trans-Pacific cables.

In addition Seabras-1 ensures highest reliability as it will maintain a lower number of active system elements, thereby reducing the probability of system failure.

By offering direct connectivity between Sao Paulo and New York together with onward connectivity and reliability, TI Sparkle is a compelling choice for carriers, content providers, and any other player that values a direct, low latency route between Brazil and the United States.

Source: Seaborn & TI Sparkle Press Releases

JRC ANALYSIS:

These two announcements by Seaborn and TI Sparkle caught the market by surprise. The equity funding from Partners Group has been in place for a while but the fact that Natixis has been successful in syndicating the debt portion of the project was big news. Natixis is involved in raising funds for a number of submarine fibre optic projects at the moment but this is the first project where they have been able to demonstrate real success.

Far more surprising was the announcement from TI Sparkle that they have taken three fiber pairs on the Seabras system. For the past 15 years, TI Sparkle has operated the "LA Nautilus" system which consists of one fibre pair on the "South America Crossing" (SAC) system, originally built by Global Crossing and now owned by Level 3, which connects Brazil to Florida, USA. As such, TI Sparkle was seen as a rather dormant player in the market.

The payment of US$300M by TI Sparkle will be a long-term installment deal. Nevertheless, it represents a significant increase in commitment by the Italians to the Brazilian market at a time when the shine of this new emerging market is beginning to wear off.