Plans for New Undersea Fiber-Optic Cables

By Francesco Guarascio and Phuong Nguyen

HANOI (Reuters) – Singaporean asset manager Keppel (OTC: KPELY) and Vietnamese conglomerate Sovico Group are discussing plans for new undersea fiber-optic cables that would boost the region's data centre industry, according to sources familiar with the discussions.

Southeast Asian countries, a major junction for cables connecting Asia to Europe, are seeking to expand their networks to meet booming demand for AI services and data centres. Vietnam alone plans to have 10 new submarine cables by 2030.

Undersea cables are at the centre of the Sino-American tech war, with the two powers vying to win contracts, especially in Asia, to build and maintain the infrastructure that carries most internet data, including sensitive information.

Under one plan under discussion, a cable would be laid to link Vietnam directly with Singapore, with an estimated cost of $150 million. This option is favoured by Sovico, though no agreement has been reached yet as talks with Keppel are ongoing.

Keppel prefers a more ambitious cable plan involving a consortium of investors, which would connect Vietnam via a longer cable running from Singapore to Japan, linking with other countries along the route.

Sovico, which is involved in aviation and banking, has recently announced plans for data centre development and did not respond to comments.

Keppel announced in November the purchase of an AI-ready data centre facility in Japan. Although Singapore is a major hub for data centres and undersea cables, it has nearly saturated its data usage capacity.

Reports indicate that neither project has confirmed builders, but discussions reveal that Chinese contractors won't be involved in the Vietnam-Singapore link due to concerns raised by U.S. officials about potential risks.

U.S. officials have been briefing Vietnamese and Singaporean counterparts to discourage engagement with Chinese contractors amid broader efforts to contain China’s influence in the region.

These two projects are separate from investments revealed by Vietnamese companies concerning four new undersea cables, which include projects by Japan's NEC and China’s HMN Technologies.

Vietnam, home to nearly 100 million people, has a growing need for online platforms but is currently only connected to global infrastructure through five undersea branches. The plans to triple this number present a chance for Vietnam to become a regional data centre hub.

Summary

Singapore's Keppel and Vietnam's Sovico are planning new undersea cables to boost data centres, aiming for increased connectivity amid rising demand and geopolitical tensions.