Dancing with Financiers:  When the Submarine Industry Goes into Flirting Mode

Laure Duvernay, Director of Project Finance and Business Development at Alcatel Submarine Networks.By Laure Duvernay
March 19, 2018

The submarine telecommunications industry comes with an intrinsic and interesting paradox: undersea systems currently carry a vast majority of the worldwide telecommunication traffic and they are one of the largest infrastructures on earth. At the same time, however, they remain mostly invisible to the naked eye and their purpose unknown to the public. Most of us in the industry can indeed testify to often facing polite incredulity when explaining the role of submarine cables compared to that of the much more famous satellites.

This relative lack of exposure may seem trivial and some of us in the field enjoy the confidential nature of the submarine world but there is at least one domain in which its mystery has a significant impact: financing. For the financial community, absence of visibility indeed often translates into higher perceived risks and longer due diligence if only because of a lack of internal expertise amongst potential funders. Consequently, when raising money, considerable time is spent educating on the ins and outs of the undersea industry before actually getting into the deeper structuring discussions. This is only one of the hurdles submarine cable systems developers have to overcome when dealing with commercial banks, export credit agencies or infrastructure funds alike.

This article will elaborate on the other obstacles as well as detail how suppliers can facilitate, if not totally alleviate, their customers’ sometimes Sisyphean task of bringing a project to life.

Enticing the financial community: A work in progress

Cable developers may have different reasons to reach out to investors and lenders. Some may be private players needing to strengthen their backbone and counting on external funds to make their project a reality, others may want to make the most of the leverage effect despite an economic situation allowing standalone financing, while a few others may just use financing as a further means to differentiate would-be suppliers. Yet, no matter the situation the financial community’s prerequisites are seldom in line with the reality and timing of submarine systems development. Among the many hurdles, here are the main ones:

To continue reading the rest of this article, please read it in Issue 99 of the SubTel Forum magazine here http://subtelforum.com/products/subtel-forum-magazine/ on page 24.