East to Med Data Corridor (ΕΜC) implementation on track

The East to Med Data Corridor (EMC), the international undersea telecommunication project set to link Asia with Europe, is entering its implementation stage.

According to a report in ‘Naftemporiki,’ EMC shareholders last week, reached a trade agreement with three Greek and one Saudi bank to finance the project, which paves the way for the start of construction of the private interest undersea data transmission cable, with the strategic support of the governments of Greece and Saudi Arabia.

The course of the project was not impacted by the recent reshuffles in its shareholding structure, following Cyta's decision not to participate after all.

As InBusinessNews has been informed, the Greek banks, National Bank of Greece, Piraeus Bank and Alpha Bank, together with the Saudi Arabian Bank AlJazira, are undertaking 60% of the financing of EMC with the remaining 40% made up of share capital.

The disbursement of the loan will begin at the beginning of March, as soon as the loan agreements are completed. The project partners have joined the special purpose vehicle that owns the project, have already paid the advance payment to the construction company Alcatel Submarine Networks (ASN), a leader in the field of submarine telecommunications cables, and it is anticipated that the construction of the EMC will start towards the end of March.

What the East to Med data Corridor (EMC) is

The EMC project, it is recalled, is a submarine and terrestrial data transmission cable system that will connect Asia to Europe, via Greece, and Saudi Arabia.

It is fully in line with the geopolitical, economic and development strategy of Greece and Saudi Arabia and makes Greece an alternative gateway for two-way data transfer between Europe and Asia and Saudi Arabia, an important regional data hub.

It is noted, in fact, that the EMC is governed by the Protocol of the 5th Greece-Saudi Arabia Joint Interministerial Committee, which convened in Athens in May 2022.

In essence, the EMC is a private project of enormous geopolitical importance. It is being implemented due to the support of the governments of Greece and Saudi Arabia, but does not receive any state funding.

It offers, for the first time, an alternative route for data transfer from Asia to Europe, bypassing Egypt, through which all relevant undersea cables pass, something which reduces delays and increases commercial benefits. At the same time, the project is in full harmony with the European Union’s digital connectivity agenda.

The Prime Minister of Greece, Kyriakos Mitsotakis, during the signing of the project's shareholders' agreement in Athens in July 2022, in the presence of himself and the Crown Prince of Saudi Arabia, Mohammed bin Salman Al Saud, underlined the importance of the EMC and emphasised that it "will make Greece a data entry gateway to the EU, simultaneously connecting it to the Middle East and Asia."

The EMC was also mentioned by the Saudi Arabia’s Minister of Investment in March 2023, who described the signing of the agreement between the shareholders as a "landmark agreement".

The partners in the great venture

The original concept and planning of the EMC belongs to Telecommunication Telephony & Satellite Applications (TTSA). It is the strategic partner of PCCW Global, the international arm of Hong Kong Telecom (HKT), in the wider area of ​​SE Europe, offering a wide range of networking and telecommunications services.

The company also invests in alternative energy sources and deals with the development and delivery of infrastructure projects, such as submarine data cables.

TTSA is participating as a shareholder in the special purpose vehicle (SPV) registered in Cyprus that was established to oversee the project, and in which, after the withdrawal of Cyta, Saudi Telecom (jointly with its subsidiary Center3) with 72 % and the Public Power Corporation of Greece (PPC) with 25% are also participating.

The pivotal role of TTSA

TTSA was founded in 2007 with Alexandros and Nikolaos Vlachos and Dimitrios Balatsos as shareholders. In 2015, it formed a joint venture with the Cypriot company Sinka LLC, owned by Alexandros Sinka, with the aim of implementing projects in the telecommunications and energy sectors.

In 2019, TTSA Cyprus was established, with the mission of taking on the international activities of TTSA, with projects such as the EMC and others.

TTSA's role in the project is pivotal. It is leading, equally with Center3, as project leaders, the process of the EMC’s preparation, supervision and integration process.

Center3 is a subsidiary of Saudi Telecom, responsible for the submarine cables and data centres of Saudi Arabia. TTSA has at its disposal its very experienced staff in the field of submarine telecommunications cables, as well as the long-term involvement of Alexandros Sinka and his team in the organisation and management of large projects.

It is noted that Sinka served as a senior executive of a construction company and participated in major infrastructure projects in Cyprus, such as Trilogy and Limassol Marina, as well as similar projects in the Middle East.

Also, Sinka has lengthy experience in international relations, serving as DISY’s International Secretary. He stepped down in 2021 to focus on his business activities.

TTSA assumed all the risk of the project’s preparation up to the implementation stage. If the project was not going to be implemented, TTSA would bear all the costs of managing the project up to that point.

With the start of the project, PPC undertook to pay 3% of EMC's share capital to TTSA, as a normal business practice, for the work it carried out, for the risk it took and to ensure that the company remained a shareholder in the project and undertakes the implementation risk attributable to it.

After all, as mentioned above, TTSA, with the support of PCCW Global, was the one that had the initial idea for the EMC, and proceeded with the design and prepared the relevant studies and the business plan.

At the same time, in its contacts with the Greek banks it obtained a non-recourse loan, while the banks adapted the loan to Islamic banking practices, for the first time in Greece.

This created the conditions for the development of an ecosystem of submarine data transmission cables and paved the way for the expansion of business activities in the Middle East.

As mentioned above, TTSA is now, together with Center3 (Saudi Telecom's subsidiary), a project leader responsible for the in-phases preparation of the delivery of the project and the sales of optical fibres.

The project leaders will receive a management fee, as remuneration for the work they perform. It is noted that this fee is not a given. Project leaders assume a significant risk of not being paid for the expenses they have incurred in the event that something goes wrong in the construction or sales phases of the project.

After all, they are paid in stages, depending on the course of implementation and the success of the project.

It is also worth noting that despite Cyta's decision to withdraw from EMC's shareholding, Cyprus continues to benefit from the project, since the special purpose vehicle which EMC will belong to is registered in Cyprus and will be taxed by the competent authorities of the Republic.

The two implementation phases…

The EMC's original design included the overall construction of the submarine cable connecting Asia to Europe. It was then decided to build it in two phases, with the first starting at the end of March, connecting Saudi Arabia to Europe and with a budget of 600 million dollars.

Now the preparation of the second phase begins, where the project will expand from Saudi Arabia to Asia.

In September 2023, on the sidelines of the G20 summit in New Delhi, Saudi Arabia, in consultation with Greece, proposed the creation of a trade corridor connecting India, the Middle East, Greece and the European Union.

It will help boost trade, and the transportation of energy, and significantly improve digital connectivity between Asia and Europe. The EMC is included as one of the strategic projects of this vision.

And, in the context of realising this vision, the Prime Minister of Greece, Kyriakos Mitsotakis, will pay an official visit to India at the end of February.

He will be accompanied by a business mission in which Alexandros Sinka will participate as a representative of TTSA to explore the possibility of expanding the EMC to India.

It has thus been proven that economic diplomacy and submarine cable diplomacy will play a significant role in the 21st century.

(Source: InBusinessNews)