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From the Far East to Italy and on through Europe

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16 May 2017

Q&A with Retelit CEO Federico Protto

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Retelit, the Italian partner on the AAE-1 submarine cable, has been gearing itself up for the launch of the 25,000km network between Europe and the Far East in the coming days. And it has certainly been busy – not only has Retelit just unveiled an innovative connectivity partnership with Belgium-based global carrier BICS, but it has also invested in Sicily-based consortium Open Hub Med. Federico Protto, Retelit’s CEO, explains how these moves will ensure that it maximises its AAE-1 offering to customers.

Q. How are things going at Retelit at the moment?

Quite well. Retelit started a fresh strategy after appointing a new board a couple of years ago, and 2016 was the first time ever that the company displayed operational profitability. We increased volumes by boosting our commercial presence and effectiveness, and at the same time kept at more or less the same opex by being very cost-conscious as we grew. We also saw a bigger demand from the Italian market for ultra-broadband and fibre-optic connections in general. 

Q. What effect do you think the imminent launch of the AAE-1 cable will have on the company?

We believe this will be a very good investment for Retelit, bringing a good boost to our volumes. It also gives us the possibility to get in touch with all the other consortium members and players from the Far East and Middle East, which will open up opportunities in these parts of the world. From our side, we can offer partners a footprint with big European players.

Q. How will Retelit’s recent move to collaborate with BICS boost its appeal once AAE-1 opens for business?

Our aim in working with BICS is to provide a seamless product from all the cable’s landing locations, like Singapore, Vietnam and India, not just to our landing station in Bari on the south-east coast of Italy, but to the main European locations, such as Milan, Frankfurt, London and Amsterdam. At first, we thought about building our own backbone in Europe, but we decided that would be very capex-intensive. BICS is a leading player with an excellent network and presence, so we felt our best answer was to partner with them. It’s a very strong partnership, in that it’s really a joint end-to-end backhaul product between us and BICS. 

Q.Why did Retelit join the Open Hub Med consortium? 

This gives us the possibility to cross-connect between AAE-1 and other submarine cables landing in Sicily, where this consortium of industry players is located. It allows us to offer a diverse submarine and terrestrial path of cables in southern Italy: one landing in Bari and travelling north via our own network and the agreement with BICS to reach the digital hubs in Europe, the other landing in Sicily and the possibility of using our or someone else’s network. We believe that southern Italy can be a competitive and secure alternative to the route via Marseille. At the moment, a lot of Mediterranean traffic is landing in Marseille because of its openness and good infrastructure. However, it is now a little crowded and traffic coming from the east also needs to go 1,000 submarine kilometres more to reach that location than Italy, so it’s time to offer the market a good alternative. 

Q. With these new initiatives, how well-prepared do you expect to be for the launch of AAE-1, and what are the prospects for the cable?

Our strategy with these moves is about leveraging and exploring the maximum we can get from the AAE-1 cable. And just to give you an idea, we are expecting something like €5-10 million more in terms of revenues from the cable business this year. Of course, there will be some price pressure and competition from alternatives and terrestrial links. However, we are convinced that this is a very good investment for us and that traffic demand will increase more and more in many of the areas of the world that the network addresses.


 

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