Marine Industries Global Market Analysis - Marine Institute

MARINE INDUSTRIES GLOBAL MARKET ANALYSIS
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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