Marine Industries Global Market Analysis - Marine Institute

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78 MARINE INDUSTRIES GLOBAL MARKET ANALYSIS We have long believed that for many commercial contractors ocean survey is a market that is too small to meet their shareholders’ growth objectives and companies are expanding their activities in to areas such as seismic survey.
MARINE INDUSTRIES GLOBAL MARKET ANALYSIS 79 12 Submarine Telecoms Definition – capital expenditure on the manufacture, supply and installation of submarine telephone cables. 1999–03 2004 2005–09 Irish Market €M – – – UK Market €M – – – Europe Market €M 3312 185 1915 World Market €M 21,270 1,126 11,646 12.1 INTRODUCTION Fibre-optic cables were introduced in 1988. In the next 9 years the investment in fibre-optic cables totalled $19.8bn.The rapid growth of the internet then caused traffic volumes to increase at 80–100% per annum. About 40,000 km of cable was installed in 1998 and over 190,000 km in 2001 at a cost of over €8 billion. Figure 12.1: Submarine Telecoms – World Market Expected investment in the period 2001 to 2004 was $36 billion 48 and in 1999 a contract was signed for construction of 13 installation & maintenance ships for the proposed ‘Project Oxygen’.Then in 2001 “dotcom” technology stocks crashed, causing cable installations to virtually grind to a halt. Projects underway caused the bottom of the market not to occur until 2003. Considerable amounts of capacity had been brought into being to satisfy the boom; survey vessels, cable lay and burial vessels and the associated hardware such as ROVs and human resources.The collapse of the submarine cable market had major repercussions for these suppliers and caused hardware to be made available for work in the oil & gas sector, depressing day-rates. The situation was exacerbated by a massive increase in the capacity of individual cables.TAT11, laid in 1996, had a capacity of 1.6 Gbits/second.The 1999 trans- Atlantic cable, Gemini, had a capacity of 60 Gbit/s. Cables planned for 2001 were 400 Gbits/s. 49 12.2 WORLD MARKET In 2004 the submarine telecom industry was valued at €1 billion.The historic data we show is sourced from KMI. Our forward view is also based on our projection of their short-term global forecasts of total km to which we have applied a regional segmentation based on the location of past installations.This is, in practice, difficult to achieve with accuracy as the submarine industry segments its markets by oceans (e.g. Atlantic, Pacific, etc) rather than by regions and countries.We are not aware of significant Irish capital investment in this sector. Source: Douglas–Westwood Table 12.1: Submarine Telecoms – World Market 1999–03 2004 2005–09 Africa 1539 100 1036 Asia 8982 448 4628 Australasia 998 50 514 E Europe/FSU 171 10 108 Latin America 2575 138 1427 Middle East 721 40 409 North America 2972 156 1608 Western Europe 3312 185 1915 TOTAL (€M) 21270 1126 11646 Source: Douglas-Westwoo Figure 12.2: Submarine Telecoms – Regional Segmentation 2005–2009 Following the dramatic collapse of capital expenditure in the sector from 2001–2003, we believe that growth is again likely. However, this will probably now be at a much more measured pace than in past years. Slow long-term growth is now forecast for submarine cable installations, to €3bn in 2009, representing average annual growth of 21.8% from 2005. 48 KMI Corporation. 49 Foot, D. ‘Underwater’. Summer 1998, p121. Source: Douglas–Westwood
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Strategic Planning and Development
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