Lawyers have placed a deal between Intelsat and Dimension Data SA chairman Andile Ngcaba - to put a satellite into orbit over Africa - into a holding pattern to do last-minute checks.
Exact details of the deal are not known. However, it is believed that Ngcaba, through his private equity firm Convergence Partners, will have about a 20% stake in the company that will be called New Dawn. The plan is to have the new satellite operational by 2011.
The deal was supposed to have been signed yesterday, during a gala dinner in honour of Intelsat`s African clients, some of who were presented with achievement awards. However, the final signing has been postponed so lawyers can check through the contract one more time.
Ngcaba, a former director-general of the Department of Communications, has made a name for himself in international connectivity by taking a 12.5% stake in East Coast undersea cable operator Seacom that is due to become operational by June 2009. He also has a stake in Telkom through the Elephant consortium, and is about to receive a windfall due to Telkom`s sale of 15% of cellular network operator Vodacom to Vodafone.
The potential importance of the event was underlined by the fact that US-based Intelsat CEO Dave McGlade addressed the dinner and presented the awards. It is understood that McGlade was due to announce the deal at the event.
Neither of the parties was prepared to comment officially on the deal, but sources say it is quite an unusual model for Intelsat as it has had to find an outside shareholder to help fund another satellite over Africa. Intelsat usually owns and operates all its satellites and currently has a constellation of 53 "birds".
Large influence
Some of the attendees at last night`s gathering believe that Intelsat had been planning the satellite for some time and it had been unable to secure the necessary funding, and Ngcaba had been approached.
"Ngcaba has a lot of contacts and a lot of influence, not just in SA, but in a number of African countries, which is very useful for a project such as this. He was also able to secure the necessary funding," a source says.
International telecommunications research company Northern Sky Research states that demand for satellite capacity is currently at a premium over Africa and that the number of transponders, the equipment on a satellite that sends and receives signals, should rise from 253 to 353 by 2012.
The company says the compound annual growth rate for various applications will grow by a rate of 6.9%, from 2007 to 2012. A breakdown of the applications shows that demand for narrow band VSAT services will grow at a rate of 14.1% over this period, demand for telephony over satellite will grow at a rate of 5.2%, video contribution will rise by 6.2%, DTH by 6.3%, and video distribution by 17.9%. Broadband growth will, however, contract by 4.4%.
"The logic for the deal is quite simple," one source says. "With the increase in cellular traffic across Africa and the fact that more undersea capacity is about to arrive, it means satellite is the natural disaster recovery route if anything goes wrong. With the increase in mobile telephony, satellite capacity has been at a premium."
The cost of launching a new satellite is extremely expensive and, during his speech, McGlade said that, apart from the building and construction of the satellite, the two biggest costs are the launch vehicle (rocket) and the insurance costs.
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