Singapore, Vietnam firms in talks for new undersea cables, sources say

NEC

13/12/2024 04:38

* 
      Keppel, Sovico Group discuss undersea cable between
Singapore
and Vietnam, sources say
    

        * 
      Keppel considers cable from Singapore to Japan with
branches to
other countries, source says
    

        * 
      Southeast Asia undersea cable plans are caught in US-China
tech
war
    

        * 
      Sovico briefed by US officials over risks of choosing
Chinese
contractors, sources say
    

        * 
      China's HMN Tech would not be involved in direct link
plan,
sources say
    

  
    By Francesco Guarascio and Phuong Nguyen
       HANOI, Dec 13 (Reuters) - Singaporean asset manager
Keppel  KPLM.SI  and Vietnamese conglomerate Sovico Group are
discussing plans for new undersea fiber-optic cables that would
boost the region's data centre industry, people familiar with
the discussions said.
    Southeast Asian countries, a major junction for cables
connecting Asia to Europe, are seeking to expand their networks
to meet booming demand for AI services and data centres. Vietnam
alone plans to have 10 new submarine cables by 2030.
    Undersea cables are at the centre of the Sino-American tech
war, with the two powers vying to win contracts, especially in
Asia, to build and maintain the strategic infrastructure that
carries most internet data, including sensitive information.
    Under one plan under discussion, a cable would be laid to
link Vietnam directly with Singapore, five people directly
involved or briefed on the matter said. 
    It would cost $150 million, according to one source with
direct knowledge of the talks.
    This option is favoured by Sovico, but talks with Keppel on
the direct cable are in flux and no agreement has been reached
yet, two sources with direct knowledge said.
    They added that Keppel prefers a more ambitious cable plan
involving a consortium of investors. 
    Under that second plan, the connection to Vietnam developed
by Sovico would be an offshoot of a longer cable, three people
said, with one noting it would run from Singapore to Japan with
links to countries along the route.
    The sources declined to be named because the information was
not public.
    Sovico, a conglomerate whose operations include aviation and
banking, has recently announced plans on data centre
development. It did not respond to requests for comment.    
    Keppel agreed in November to buy an AI-ready data centre
facility in Japan. Singapore is a major hub for data centres and
undersea cables, but the small island-state has nearly saturated
 its data usage capacity.
    A spokesperson for Keppel declined to answer Reuters
questions about the two cable plans, saying: "We do not comment
on market speculation."
    A Sovico executive mentioned the company's cable plans with
Keppel late last month in an internal meeting with Vietnam's
Prime Minister Pham Minh Chinh and other companies involved in
the digital economy, one of the meeting participants told
Reuters.
    Vietnam's government office and the foreign affairs ministry
did not reply to requests for comment.    
     
    US-CHINA COMPETITION
    Under the preliminary plans, no decision had been made about
who would build either of the cables, but two people familiar
with the talks said Chinese contractors would not be involved in
the possible direct link between Vietnam and Singapore.
    Sovico was briefed by U.S. officials about alleged risks
linked to choosing Chinese contractors for the cables, two
people with direct knowledge of the talks told Reuters.
    U.S. officials and consultants have organised multiple
briefings with Vietnamese and Singaporean officials in recent
months to discourage them from using HMN Technologies, part of a
global campaign to contain the rise of the Chinese contractor,
Reuters exclusively reported in September.
    The two projects are separate from possible investments
previously announced by Vietnamese companies in four new
undersea cables, of which two would be built by Japan's NEC, and
one by China's HMN Tech to connect Vietnam to existing
international cables, according to public information. 
    The fourth was announced in April by Vietnam's state-owned
telecom firm Viettel and Singapore's Singtel and would link
Vietnam directly to Singapore under a preliminary plan. No
building contract has been announced.
    Vietnam, with a population of nearly 100 million, is a large
market for online platforms, but is currently connected to the
global internet infrastructure through only five undersea
branches to international cables.
    Its plans to triple the number of its cables are seen by
industry experts as a possible boost to its chances of becoming
an alternative regional data centre hub, despite power supply
issues and strict data regulations. 

 (Reporting by Francesco Guarascio, Khanh Vu and Phuong Nguyen
in Hanoi and Fanny Potkin in Singapore; additional reporting by
Yantoultra Ngui in Singapore; Editing by Kay Johnson and Sonali
Paul)
 ((Francesco.Guarascio@thomsonreuters.com;))