China Eximbank provides RMB 3.06 billion ‘mixed credit’ for 5900 km South Atlantic Inter Link (SAIL) Cable Project

On October 14, 2015, China Unicom and CAMTEL — a state-owned national telecommunications and Internet service provider in Cameroon — signed a partnership agreement for the 5900 km South Atlantic Inter Link (SAIL) Cable Project. Then, on August 11, 2016, China Unicom and CAMTEL signed a Construction and Maintenance Agreement (C&MA) for the South Atlantic Inter Link (SAIL) Cable Project, which established a special purpose vehicle (SPV) called the South Atlantic Inter Link Consortium (南大西洋国际海底光缆组织). China Eximbank subsequently signed a loan agreement worth approximately RMB 3.06 billion with South Atlantic Inter Link Consortium (南大西洋国际海底光缆组织) — a joint venture between China Unicom and CAMTEL — for the 5900 km South Atlantic Inter Link (SAIL) Cable Project. The borrowing terms of the loan are unknown. However, it is known that the borrower was expected to use the proceeds of the loan to finance 85% of the total cost (RMB 3.6 billion) of the project (including a commercial contract with Huawei Marine Networks Co., Limited that was signed on June 27, 2017). The remainder (15%) of the project cost was to be financed by China Unicom, Huawei Marine Networks Co., Limited and CAMTEL. The purpose of the project was to lay a 5900 km submarine internet cable -- called the South Atlantic Inter Link (SAIL) -- from Kribi, Cameroon to Fortaleza, Brazil. SAIL was expected to become the first intercontinental fast direct submarine cable spanning the South Atlantic Ocean and connecting the African and South American continents. The SAIL cable system was designed to be a fast and direct path, utilizing the industry leading 100G transmission technology and to deliver a design capacity of 32 Tbps, through a 4 fiber pair configuration. Huawei Marine Networks Co., Limited was the general EPC contractor responsible for implementation. However, China Unicom also provided project management and business operations support. The submarine fiber optic cable for the project was manufactured in Norway, but other equipment was produced in China. Project Implementation commenced in October 2015. By September 29, 2017, the project had achieved a 60% completion rate. The drawing of the first meter of the submarine cable took place in Kribi, Cameroon on May 22, 2018. September 4, 2018 marked the completion of all cable-laying work. The SAIL cable was put into commercial operation on November 15, 2018. This project was originally scheduled for completion by the end of the third quarter of 2018.

Additional details

1. Multiple sources indicate that the debt financing for this project was provided via “Two Excellent” loans (or a so-called “mixed credit”): an RMB-denominated government concessional loan (GCL) and a USD-denominated preferential buyer’s credit (PBC). However, the respective face values of the GCL and PBC are unknown. Therefore, AidData relies on an aggregate estimate of RMB 3.06 billion (85% of RMB 3.6 billion) based on the following source: https://www.dropbox.com/s/fibh8sn1m1jp4b9/China%20Unicom%2C%20partners%20evaluate%20Cameroon-Brazil%20optical%20fibre%20project%20-%20People%27s%20Daily%20Online.pdf?dl=0. It is also possible that the GCL and PBC proceeds were on-lent to South Atlantic Inter Link Consortium (南大西洋国际海底光缆组织). However, this issue requires further investigation. 2. The project is also known as Cameroon-Brazil Cable System (or CBCS) and the Cameroon-Brazil Underwater Telecommunications Cable Project. The Chinese name of this project is 南大西洋国际海底光缆 or 南大西洋国际海底光缆（SAIL) or 喀麦隆巴西 SAIL 项目 or 跨南大西洋国际海底光缆该项目 or CBCS项目.” 3. Some sources suggest that the South Atlantic Inter Link Consortium (南大西洋国际海底光缆组织) is a joint venture between China Unicom, China Unicom do Brasil Telecomunicacoes Ltda (a subsidiary of China Unicom), and CAMTEL. This issue warrants further investigation. 4. CAMTEL is 100% owned by the Cameroonian government and has built and manages the national fiber transmission backbone network, fixed network business and a CDMA network nationwide. CAMTEL’s national backbone fibre network interconnects neighboring countries such as Nigeria, Central African Republic and Chad and has now grown into a regional fibre network. CAMTEL aims to develop Cameroon into an international traffic Hub in Africa through trans-border terrestrial cable and international submarine cables such as SAT-3, WACS, ACE, NCSCS, SAIL, etc. China Unicom is a leading telecom operator in China and APAC. It is the only Chinese telecom operator listed on the stock exchanges in New York, Hong Kong and Shanghai. China Unicom provides a full range of telecommunications services in China, including mobile broadband (WCDMA, LTE FDD, TD-LTE), fixed-line broadband, GSM, fixed-line local access, ICT, data communications and other related value-added services. By the end of July 2018, China Unicom’s total subscriber tally for the mobile, fixed-line broadband and local access businesses reached 441 million. Huawei Marine Networks Co., Limited (Huawei Marine) is a joint venture established by Huawei Technologies Co., Ltd. and Global Marine Systems Limited. Combining the substantial expertise of the two parent companies, Huawei Marine integrates state-of-the-art optical transmission technology and 160 years of marine engineering and installation excellence with a strong commitment to the development of innovative submarine cable network solutions throughout the globe. Huawei Marine delivers highly reliable, cost-effective turnkey submarine cable system solutions incorporating system design, integration and installation services with an on-going focus and commitment to customer support for network operators. 5. The loan that China Eximbank issued for this project is not included in the database of Chinese loan commitments that SAIS-CARI released in July 2020.

Number of official sources

16

Number of total sources

49