META Meta Platforms Inc

By Drew FitzGerald 

Facebook Inc. is circling Africa. Literally.

The company is in talks to develop an underwater data cable that would encircle the continent, according to people familiar with the plans, an effort aimed at driving down its bandwidth costs and making it easier for the social media giant to sign up more users.

The three-stage project, named Simba after the lead character in "The Lion King," could link up with beachheads in several countries on the continent's eastern, western and Mediterranean coasts, though the exact route and number of landings is in flux, the people said.

Facebook spokesman Travis Reed declined to comment on the company's plans for Africa. "We look all over the world when we consider subsea cable routes," he said.

Simba isn't Facebook's first foray into subsea cables, the high-capacity fiber-optic lines that carry most of the world's core internet traffic. The company has led projects linking markets in North America, Europe and East Asia, usually sharing the investment burden with traditional telecommunications companies, which lack the cash to lay down the cables on their own.

"When you're one of the biggest users of bandwidth, it's entirely rational to cut out the middleman and get the capacity at-cost," said Alan Mauldin, an analyst at market researcher TeleGeography.

Negotiations for the Simba project are continuing, the people said, cautioning that talks could still fall apart.

Google parent Alphabet Inc. is also in talks to build a cable system called Equiano down Africa's western coast, according to people familiar with its plans. China's Huawei Technologies Co. is rolling out subsea cable links to Africa through a subsidiary building a cable through the Indian Ocean.

Industry executives say the proposed Simba system is uniquely ambitious. The project would give Facebook's European and Asian data centers a dedicated and reliable link to growing African markets where its apps like WhatsApp are already popular. The company has funded regional networks in developing economies like Uganda to help connect the roughly 3.8 billion people across the globe who still lack internet access.

The system also could benefit partner telecom companies like MTN Group and Vodafone PLC that already serve booming economies in South Africa and Nigeria. Those companies could help pay for the cable project in exchange for some of its fiber-optic capacity, said one of the people familiar with Facebook's plans. An MTN spokeswoman declined to comment. Vodafone didn't immediately respond to a request for comment.

Tech companies like Facebook and Alphabet, wary of the wholesale telecom market and the regulatory burdens that come with it, tend to avoid selling bandwidth on cables they help fund. They have access to whole strands of fiber-optic wire, allowing them to shuttle most of their data through private networks separated from the broader internet.

Facebook has taken a long-term view with past network investments. Its Internet.org nonprofit has financed access to a small group of websites through Free Basics, a no-cost wireless service offered in several countries. Regulators in other countries have banned the program, arguing against the limited version of the web that the Facebook-backed group has curated.

Facebook is one of several large U.S. technology companies that have taken a growing role in planning and financing the internet's plumbing to serve their interests. In the process, they have supplanted traditional telecom companies that used to dominate the industry.

Alphabet has built fiber-optic cables in several cities and launched broadband-beaming balloons over hard-to-reach areas. Microsoft Corp. is pushing U.S. authorities to allow broadband service to use the "white spaces" in the radio spectrum between the channels reserved for television broadcasts.

A project as large as the one proposed by Facebook could cost up to $1 billion to build, said Greg Varisco, chief executive of Cinturion, a privately held company planning its own cable system in the Indian Ocean.

Mr. Varisco said the social networking company will likely see the project through because its executives are planning for needs several years in the future. But working with several different telecom companies and government regulators could pose a challenge.

"They're not small projects, and they've got a lot of politics to work through," he said.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com

(END) Dow Jones Newswires

April 07, 2019 11:14 ET (15:14 GMT)

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