SAMOA PLANS SECOND UNDERSEA FIBER OPTIC CABLE

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To connect with Sydney, Auckland and Los Angeles

By Fili Sagapolutele PAGO PAGO, American Samoa, (Samoa News, Dec. 21, 2010) - The Samoa government is moving forward with another undersea fiber optic cable connecting the Independent State with Australia, New Zealand and California, which may mean competition for the American Samoa Hawaii Cable LLC (ASH-Cable), whose major shareholder has reported an increase in revenues.

However, there are no other specific details of how much the Samoa government will pay or the role it will play in the "high speed undersea cable" for the Pacific, a project of the Pacific Fibre Company.

According to a weekly news release by the Samoa government, on Thursday, the cabinet approved the signing of a memorandum of understanding for the fiber optic cable provided by Pacific Fibre Company and the MOU is to be signed by Safuneituuga Paaga Neri, the Minister of Communication.

No date was given as to when it will be signed.

A regional news release in July states that the "high-efficiency," 13,600km (around 8,500 miles) Pacific Fibre cable will be built jointly by Pacific Fibre Ltd and Asian telecommunication services provider Pacnet.

The cable will land in Sydney, Auckland and Los Angeles and will be ready for service in 2013.

The companies will co-own the cable and share responsibility for the cable supply contract, operations and maintenance costs.

This new cable will deliver the enhanced international connectivity that is essential to support these broadband initiatives, it says.

Bloomberg Businessweek wire service reported in March this year that Pacific Fibre Ltd, a New Zealand investor group, plans to build a NZ$900 million (US$700 million) fiber-optic cable linking New Zealand, Australia and the U.S. to improve Internet speeds between the three nations. The cable is expected to be operational in 2013.

ASH-Cable currently provides fiber optic cable connection between Samoa and American Samoa to Hawai’i, under the link American Samoa-Samoa in which the Samoa government is a subscriber to the ASH-Cable, which is 33 percent owned by the American Samoa Government.

Meanwhile, ASH-Cable’s major shareholder Florida-based eLandia International in its quarterly filing with the U.S. Security and Exchange Commission (SEC) for the three months ending Sept. 30, 2010 has increased revenues compared to the same period last year.

"Revenue from the provision of professional services for the three months ended September 30, 2010 increased compared with the same period in 2009 primarily as a result of the provision of communication services through our undersea cable operations, as well as revenues generated from our cable television operations, both of which began generating revenues during the second quarter of 2009," according to the company, who is also the owner of Moana TV.

"Service revenue also increased as a result of securing and activating additional fiber capacity for our existing customers and leased capacity for new broadband and fiber customers," it says but didn’t provide specific details.

The Samoa government-owned Samoa Telco and locally based American Samoa TeleCommunications and Blue Sky Communications — which is owned by eLandia, are the known major customers for ASH-Cable.

"Our service gross margin increased from 59 percent for the three months ended September 30, 2009 to 69 percent for the three months ended September 30, 2010. The increase is primarily attributable to the higher margin revenues related to the communication services provided by our undersea cable operations and our data services provided to our large broadband customers. The increase in our service margin was offset by our cable television service offerings, which carry a lower overall margin than some of our other services," said eLandia in its SEC filing last month.

For expenses, eLandia says that general and administrative expenses were higher for the three months ended September 30, 2010 than for the same period in 2009 and the increase is mainly due to legal, professional and management fees incurred for the undersea cable operations related to the broadband stimulus funding application process.

(It was announced locally in August of this year that the application had been approved and a $16.7 million loan guarantee on a loan the company has with the ANZ Bank from the US Department of Agriculture was granted. With this guarantee, a "slightly better interest rate" was attained, according to the local CEO of Blue Sky Communications, who is also the CEO of ASH-Cable — as the bank loan was now ‘safely’ secured.)

Additionally, expenses related to the depreciation of property, plant and equipment for the three months ended September 30, 2010 were lower than for the same period in 2009 mainly due to the full depreciation of certain assets, offset by the depreciation on network equipment installed to support our undersea cable operations.

"Other income, net for the three months ended September 30, 2010 and 2009, is mainly comprised of the non-controlling interest on the American Samoan Hawaii Cable segment of our operations, representing the 33.33 percent ownership of the American Samoa Government," it says.

(There were no details of what exactly this "other income" comprises in reference to "…representing the 33.33 percent ownership of the American Samoa Government.")

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