Viettel Invests US$50 Million in New Sea Fibre-Optic Cable

Viettel has invested US$50 million in an AAE-1 sea fibre-optic cable offshore station at Vũng Tàu that is set to operate by the end of the year.

AAE-1 Cable Map

Source: AAE-1 Consortium

The cable, which has a length of 23,000 km, will connect Asia, Africa and Europe. The cable system also has offshore stations in Hong Kong, Singapore, France and other locations.

Total investment for the system is $820 million, with 20 leading telecommunication companies in 18 countries providing funds. Viettel will have a total volume of 2 terabits per second on the cable.
The cable will play an important role in Viettel’s international connection infrastructure, meeting demand for international bandwidth in Việt Nam and serving connections with Europe and several African countries where Viettel has investments, including Tanzania and Burundi.

The connection with the AAE-1 fibre-optic cable will increase safety and stabilization for Viettel’s international network connection as well as national information security. Vietnamese telecommunication enterprises are currently connected through several different sea fibre-optic cables, including AAG, which is 20,000km long with a volume of 2 terabits per second. It began operating in November 2009, connecting South East Asia with the US, Australia, India and Africa.

Though the cable has helped Việt Nam connect with the rest of the world, it has had many repairs, causing internet connection disruptions. As a result, Vietnamese network service providers plan to reduce their volume via international connections through the AAG cable because of its intermittent problems and want to use another cable system.

Source: Viet Nam News

ANALYSIS: Viettel has been slated as the Vietnamese member of the AAE-1 consortium very soon after its inception in 2013 but this is the first time that details of the company's investment in AAE-1 have been released.

The article suggests that US$50M has been invested in a new cable landing station at Vũng Tàu but most of this amount will actually account for the relatively long cable branch that will be laid from Vũng Tàu to the main trunk of the AAE-1 cable and the associated branching unit.

It is not clear whether a new cable landing station will be built at Vũng Tàu or whether an existing facility will be used. A new cable landing station would cost between US$1M and US$3M.

A total project cost of US$820M for 23,000 km of submarine fiber optic cable and associated facilities equates to about US$35,000 per kilometer. As a benchmark cost, this is on the high side for an ultra-long haul cable but the many branches and landings will have driven up the cost.

The AAE-1 system will consist of 4 fiber pairs carrying 80 wavelengths of 100 Gbit/s for an overall design capacity of 32 Tbit/s. It would therefore appear that the capacity on the system is being divided up evenly among the 20 consortium members, with each getting 1.6 Tbit/s.

As the article suggests, Viettel's investment in AAE-1 is driven by a need to have diverse international connectivity in Vietnam, particularly because the country's earlier investment in transpacific cable, AAG, has led to increased expectations among Vietnamese Internet users which AAG has been unable to meet. AAE-1 is not a direct replacement for AAG because it connects Asia with Europe and will offer a higher latency route to North America but it will provide some additional capacity to meet demand growth and alleviate service disruption when AAG next goes down.

However, obtaining 1.6 Tbit/s on AAE-1 is a short-term fix for Vietnam. Demand growth in Vietnam, driven by investment in 4G (and later 5G) mobile will outstrip the capacity provided by AAG and AAE-1 within the next few years. The next cable to be developed for the Vietnamese market will probably be a private one.