Submarine telecom cable to connect India, Sri Lanka

COLOMBO (Reuters) - Sri Lanka Telecom and India's state-run Bharat Sanchar Nigam Ltd said on Monday they would build a US$15 million undersea cable between the neighbouring countries, betting on an explosion in demand for broadband internet services.

The 308km cable will connect Tuticorin in southern India with Mount Lavinia in southwest Sri Lanka, and is expected to enter service in March 2006.

Both companies will fund the project with cash and are expecting to recover their investment in 10 years or less. The cable itself will have a working life of at least 25 years.

"We are sharing the cost 50-50," Shuhei Anan, chief executive officer of Sri Lanka Telecom told a news conference, refusing to be drawn on how the cable would impact on group revenues.

Sri Lanka Telecom already has a stake in a broadband cable stretching from Mount Lavinia, south of the capital Colombo, to Singapore and then on to France, and officials said the new cable should help bring down charges for call traffic.

"We made the investment on certain assumptions...(including) an explosion of broadband and data traffic," said Sri Lanka Telecom's chief marketing officer Kaila Chandrasena.

Bharat Sanchar Nigam Ltd is the world's seventh-largest telecoms operator and India's second-biggest provider of GSM-based mobile services, with over 55 million customers.

Sri Lanka Telecom, 35 percent owned by Japan's Nippon Telegraph and Telephone Corp, is the island's number one fixed line operator and has over 1 million customers.