VNPT to ink BCC in giant telecoms deal

The deal will help consolidate the nation’s international telecommunications network

The MoU, signed on May 24, would see the construction of a 1,200 kilometre multi-terabit international fibre optic cable system. The system would connect Vietnam to worldwide telecommunications networks with a connection running from Hong Kong to the Vietnam Telecommunication International’s (VTI) cable landing station in Danang.
VNPT intends to link Vietnam to other regional nations and expand its line to the US.
The project, named CARUS after the third century Roman Emperor, would require approximately $150 million to complete.
Carl Strefford, operations director for the telecommunication project management firm, Tricom Asia, said the MOU gave the project a green light.
“The next step is to develop the BCC. We need to work very closely with VNPT to basically sort out all legal aspects of the relationship,” he said.
“The granting of an investment licence would follow shortly after, which would allow the building programme to begin,” Strefford said.
Tran Manh Hung, deputy general director of VNPT, said the signing was the first legal step for the two sides to negotiate the form of the BCC.
“In the next few weeks, we will negotiate the details needed to establish the contract,” Hung said. It was expected that the foreign partner would fund the project while the Vietnamese partner would provide infrastructure and the labour force.
Vietnam will have an operational system by the third quarter of 2005 after six months construction, “which is an aggressive but achievable timeline,” Strefford said.
He said this could be achieved because of the significant amount of preparations that has already taken place during MOU negotiations.
Project CARUS is the brainchild of Tricom Asia’s Chief Executive Officer Niall Gilfillan. It was the culmination of two years’ work between Tricom Asia, VNPT and VTI to design a solution that would ensure Vietnam’s international telecommunications infrastructure would be stable and secure.
“We have banks waiting in the wings to fund the project. So, a lot of the work has already been done. A signature and a piece of paper are all we need,” Strefford said.
By 2005, Vietnam is to have four undersea fibre optic cable lines: a $160 million TVH with capacity of 565 Mbps, a 10 gigabyte-per- second line connected to SEA-ME-We, a C2C line linking Hong Kong, Singapore and Vietnam and the CARUS.
The first BCC between Telstra and VNPT expired in 2002. Telstra invested $237 million into building and upgrading the country’s international telecommunications network infrastructure, including updating its international gateway and building TVH cable and two satellite stations.
For the time being, foreign investors in telecommunications have been allowed to operate BCCs in which foreign investors develop infrastructure while local partners provide services. The BCC is a contract in which the two sides share revenue over a 10-year period. Once the terms of the contract have expired, the value of the BCC will be sold to the foreigner for $10.