The undersea cable environment around the African continent continues to evolve. Proposed cables appear, disappear, merge. Steve Song from the Shuttleworth Foundation is keeping track.
Suddenly out of the blue last week a copy of the SAT3 shareholders' agreement came into our hands. This 76 page document (with extensive appendices) was signed on 17 June 1999. It is the “commercially confidential” agreement that outlines the capacity held by the different partners and the governance of the consortium. Russell Southwood takes a look at the main parts of the agreement and identifies some items that seem to be missing.
The copy of the SAT3 document that has come to us has been cross-checked against parts of the shareholders’ agreement that we have seen from another source. Both sets of documents match and we are convinced that this document is genuine.
Each of the signatories received a Capacity Bonus when they signed the document on 17 June 1999. The capacities each party took up are laid out in the appendices in MIU-kilometres. The document states that this shareholder agreement supersedes all previous versions and any other agreements, verbal or otherwise. We will see the significance of this below.
It sets out that the cable system will be run by a Management Committee that will take all decisions except for those reserved to the Purchasing Committee, a sub-committee of MOU signatories that oversaw the building of the system and was given powers to run the capital project of building the system.
The Management Committee consists a Chair, two Vice Chairs representing the SAT3 and SAFE segments of the cable and a representative of each of the signatories of the agreement. Signatories are able to nominate someone from another signatory company to represent them at the Committee meetings. Meetings are called by the Chair or on the votes of 10% or more of the signatories. The quorum for a meeting is representation from 60% of the signatories. If there is a disagreement about any proposal bought before the Committee, a simply majority vote will suffice to pass it.
There are three operational sub-Committees: Finance and Commercial (chaired by Ghana Telecom); an Operations and Maintenance Sub-Committee (chaired by France Telecom); and a Delivery and Restoration Committee (again chaired by France Telecom).
According to paragraph 10 of the agreement, each party is exclusively responsible for the operation and maintenance of its segments of the cable. Each investor in the project has been allocated a certain level of capacity according to the amount invested and this is has been calculated in MIU-Kilometres. As capacity was calculated in a distance-related measure, it lays the basis for charging on what is claimed to be distance-related tariffing.
It also lays aside pool capacity and “Interests in Common” reserve capacity. The agreement allows for bi-annual decisions to be made on turning pool capacity into reserve capacity. No signatory is allowed to re-assign its reserve capacity to another party before the pool capacity is exhausted. Initially, the terms for the sale of IRUs (Indefeasible Rights of Use, similar to time-limited leasing of capacity) was to be decided by the Management Committee and not be made on a bilateral basis. After five years or when pool capacity sold reached 75%, IRUs can be sold by the Network Administrator once a year at a price to be agreed by the Management Committee. Reserve capacity can also be sold for “occasional commercial use” on a basis decided by the Management Committee. Upgrades in capacity can be approved by 60% of the signatories to the agreement.
Parties using the cable pay an annual charge to landing station owners described as being for covering operation and maintenance of the landing station. Landing station operators (described as “terminal parties”) are obliged to provide connections to the terrestrial systems in their country (something many did rather slowly). And significantly, these terms and conditions should not contradict the regulation in place in the countries concerned. In other words, the parties concerned acknowledge the primacy of national law.
The point about primacy of national law is reinforced by paragraph 20.1 which states that the implementation of the cable is subject to obtaining the relevant agreements, Government authorisations, licences and necessary permits.
No signatory can sell, transfer or dispose of any rights or obligations in relation to the fibre without the permission of the Management Committee. Furthermore (24.2) parties are bound to the terms of the agreement and these terms supercede those that any corporate entity might take to itself within their national jurisdictions.
The document is explicitly described as “confidential” (26) except under the following conditions:
Where a signatory party is a legal entity in a national jurisdiction it should abide by the laws and regulations of that jurisdiction and render up the required information to all governmental agencies requiring it and to all competent judicial tribunals. This rather undercuts Telkom SA’s argument that it is bound by confidentiality and exposes its long campaign of not delivering the agreement to the South African government for what it is: simply obstruction of something it was able to do but chose not to for its own self-interested reasons.
Whether the copy of agreement (which matches with parts of the agreement supplied by another source) are the full agreement currently in force must be open to doubt for two reasons:
Firstly, there appears to be no mention of the national exclusivity period that Telkom SA (the managing agents of the system) acknowledges exists.
Secondly, the signatories to the agreement and the allocated capacity contains parties that eventually were not part of the system. These include: Burkina Faso’s Onatel. Gambia’s Gamtel, Guinea’s Sotelgui and Niger’s Sonitel. These are grouped together as joint investors, one lot with Benin’s OPT and the other with Senegal’s Sonatel.
The largest investors in the cable are: France Telecom (12.08%); Nitel (8.39%); and TCI, a subsidiary of AT&T (12.42%) and VSNL (8.93%). The total investment for both the SAT3 and SAFE portions of the cable was US$595 million.
Should anyone out there want to furnish us with any subsequent amendments to the shareholder’s agreement, we will be happy to clarify anything that has subsequently changed.
Source: Balancing Act