Phone companies to lay underseas cables

Phone companies to lay underseas cables

SINGAPORE (Bloomberg): Asia's biggest phone companies will
sign a pact in two weeks to build a S$1 billion underwater cable
network, allowing speedier phone and Internet links in the
region, three of the companies said.

The network, called APCN-2, is expected to replace the
existing Asia Pacific Cable Network when it's completed in 2002,
and will help the region's dominant phone companies stay ahead as
competition intensifies in their telecommunications markets.

The proposal that could bring together Korea Telecom Corp.,
Hong Kong Telecommunications Ltd. and eight others, is also a
sign that companies are gearing up for a pick up in demand for
goods and services in the region.

"Phone companies realize they have to capture capacity
early to maintain growth, and to maintain their dominance," said
Daniel Widdicombe, a telecommunication analyst and managing
director at Bear Stearns Singapore Pte. "They are rushing to tie
in capacity in expectation of a huge jump in data connections."

Widdicombe expects data usage to expand between 40 percent and
50 percent annually in Asia, with more business communications
and a heavier use of the Internet.

The number of Internet users in Asia outside of Japan is
expected to expand 35 percent a year to 57.5 million by 2003,
said International Data Corp. The market researcher also expects
data revenue for the region to increase at an average of 32
percent a year to $18.5 billion by 2002, twice the pace of voice
revenue growth.

"The use of wireless, data and the Internet will continue to
increase in Korea, driving earnings growth," said Hong Sung Han,
manager of Korea Telecom's international submarine cable
division. "Korea Telecom is the most aggressive investor" in the
project, he said, declining to be specific.

With a capacity of 640 gigabits -- at least twice the current
capacity and equivalent to about 8 million phone lines
transmitting data at the same time -- the new network will
quicken data connections within the region, as well as with the
U.S. The U.S. link will be through existing networks from China
and Japan.

France's Alcatel SA, Lucent Technologies Inc. in the U.S. and
Bermuda-based Tyco International Ltd. are among companies that
have put telecommunications cables under the sea and may bid.
The network will connect Japan, South Korea, China, Taiwan, Hong
Kong, Malaysia and Singapore, with likely extensions eventually
to other countries such as Australia.

The new network will help Asia's former phone monopolies that
are now bracing for competition on their home turf that will
end their control of fixed-line and data-transmission.

Singapore Telecommunications Ltd. for example, will lose its
fixed-line monopoly in April 2000.

The cable network pact will be signed in China in the middle
of June.

Other phone companies involved are likely to be Japan's KDD
Co. and Japan Telecom Co., ChungHwa Telecom Co., Telekom Malaysia
Bhd., Singapore Telecom, Indonesia's PT Indosat, China Telecom
Ltd. and Australia's Telstra Corp. U.S. phone companies are also
expected to join in the plans.