Communication and marketing material

COMMUNICATION AND MARKETING MATERIAL
SEVENTH FRAMEWORK PROGRAM
RESEARCH INFRASTRUCTURES
Grant Agreement Number 283396
Feasibility Study for a direct Europe Link with
Latin America
Deliverable 7.1.1
Communication and marketing
material
Project Reference: 283396
Contract Type: Coordination and support actions
1/2
COMMUNICATION AND MARKETING MATERIAL
1. INTRODUCTION
This deliverable contains two presentations that have been the basis for the
dissemination and presentation activities of ELLA. The two presentations have been
kept up-to-date with the relevant content of the other WPs as it was produced or
modified
Project Reference: 283396
Contract Type: Coordination and support actions
2/2
SEVENTH FRAMEWORK PROGRAMME
RESEARCH INFRASTRUCTURES
Grant Agreement Number 283396 Deliverable 7.1.1 Communica)on and marke)ng material General ELLA Project Presenta)on September 29, 2012 This presentation of the ELLA Project is given by
l 
..........................................................
l 
l 
E-mail:
Phone:
Website:
l 
Additional contacts
l 
l 
ELLA Project, General Presenta?on 2 What this presentation is about
l 
l 
ELLA is an optical submarine communication cable, intended to link directly
Europe and Latin America
This presentation was produced by several people and organisations, mainly
by:
– 
– 
– 
l 
l 
ELLA Project team;
Consultants contracted by ELLA in many countries
Providers who have contributed for free confidential data on traffic matrices and cost details under
NDAs
ELLA addresses a necessity for the research and education communities and
a good opportunity for businesses, both in Europe and Latin America.
ELLA has proved the possibility to strongly lower costs of use and provide
better functional characteristics (lower latency time) than the already available
or planned communication links through the USA or Africa.
ELLA Project, General Presenta?on 3 The World is Changing Fast
l 
There is a growing concern with sustainable use of the resources of
the world due to
– 
– 
the growing population and the consequent stresses on natural resources
(e.g. productive land, clean water; land, water and air pollution, not
renewable energy sources)
the changing climate and reactions and countermeasures to it:
l 
l 
l 
l 
there is an increasing social and governmental pressure for the reduction of the
emission of greenhouse gases
there is an increasing pressure for the reduction of the ecologic footprint in
developed and developing nations
there is a search, with growing intensity, for, and increased use of, alternative,
renewable and less polluting energy sources
There is a speedup in the rate of change of human material
accomplishments
– 
– 
technological progress, new products, new processes
Pressure for improved living conditions under more limited and stressing
conditions but also due to higher capacity for innovation and development
and manufacturing
ELLA Project, General Presenta?on More changes and challenges
l 
There is a growing preoccupation with the impacts of changes of climate and population
growth on economy, food production, living conditions, creating geopolitical stresses and
changes in priorities and outlooks. As a consequence of this, some of the tendencies are
– 
– 
– 
– 
– 
l 
l 
intensified research and pilot projects seeking practical alternative and renewable energy sources
(e.g. solar thermic, biomass, photoelectric, eolic, hydraulic)
intensified research into understanding how, and even what, matter is, and ways to put it to generate
energy (e.g. cosmic rays, astrophysics, plasma reactors, high-energy physics) and to create new
materials with desirable characteristics (e.g. nanotechnology, microelectronics, carbon fibres,
fullerenes, bioengineering, etc.)
higher cost of fossil originated fuels, and of travel and transport
promotion of increased use of human interactions in the virtual space -- reduced rate of occurrence
of “physical meetings” and of big real space events
measures to reduce and counteract the negative effects of changes of climatic conditions on
populations (e.g. inundations, desertification, changes in conditions for agribusiness, alterations in
plant coverage and habitats)
There is also a growing change in perception of political and social issues affecting regions
and the whole world due to the increased competition and frictions among the interests of
regions, nations and political blocks
There is a growing cohort of people, belonging to new generations, on the one hand
exposed to insecure future perspective due to economic, cultural and other changes in the
environment, on the other hand quite familiar with, or better, native to mobile phones, social
networking, video gaming, virtual environments, e-commerce, etc. and these people are
entering the work force.
ELLA Project, General Presenta?on The Environment in the Digital Economy
l 
l 
The diffusion of the Digital Economy is a true revolution
It is not just evolution but much more:
– 
– 
– 
– 
The Economy is becoming less material and more virtual as more kinds and greater
volume of virtual goods are becoming part of it;
The demand on communications networks and access to them is growing
exponentially but the trends can not be sized precisely;
The rate of innovation in digital products (including services) is growing;
Many of these innovations are changing the way people work (and play)
l 
– 
– 
l 
Mobile phones, e-mail, social networks, e-marketing, YouTube, e-books, BIG DATA, cloud
computing , crowdsourcing ...
These changes are provoking additional changes and also opportunities for new
products, new businesses and new business models;
Newer generations, of school age or entering the labour market, were born in the
digital age and interact with it quite naturally (unlike older generations);
The demand for mobile and fixed communications and devices is growing at a
very high and effectively unpredictable way.
ELLA Project, General Presenta?on 6 More on the Digital Economy
l 
l 
Manufacturing, commerce and services are
becoming more international (search for improved
competitiveness and opportunities)
The general tendencies for ICT use and diffusion
are:
– 
– 
– 
– 
– 
Very steep rates of increase of use
Very quickly growing capacity demand
Growing diversity and diffusion of use
Growing demand for service safety, privacy, cost reduction
Real time interactive services, like cloud computing, emeetings, e-learning, e-trading, etc. demand low latency
and high capacity links.
ELLA Project, General Presenta?on End-to-end broadband is very important
l 
l 
l 
The awareness of the public of the strategic importance of having
broadband access is growing;
Broadband access is the way to connectedness to high quality
education, entertainment, news, social and political participation and
sustainable businesses;
There is a growing number of initiatives in small communities to assure
wired and wireless broadband connections:
– 
– 
– 
l 
These communities are not large enough for the telco services to be profitable, so they
are not served;
These communities buy their infrastructure for connectivity;
The money for this infrastructure is put up by (a good part of) the citizens of such
communities.
There is no use in having broadband access if there is not enough
end-to-end capacity
ELLA Project, General Presenta?on 8 High and Expensive Challenges
l 
Contrasting with digital age euphoria, the world is facing some
tough challenges, such as:
– 
– 
– 
– 
Climate change and its consequences (agriculture, food, natural disasters, search
for alternative energy sources, ...);
Economic instabilities and geopolitical shifts (EU, USA, China, India, …);
Increasing costs and demands on healthcare, education, infrastructure (logistics,
water, energy, telecommunications, civil defence, ...)
High and increasing complexity and cost of basic research and some applied
research areas are leading to:
–  More and larger national and international cooperative R&D projects;
–  Huge and expensive national and international laboratories;
–  These generate high and fast growing demand on computing and
communication services, devices and infrastructure;
–  E.g.: the structure of matter and energy (CERN, Fermi Lab, optical and radio
telescopes , NASA); aerospace (NASA, Airbus); chemical, pharmaceutical
and biomedical industries (…).
ELLA Project, General Presenta?on 9 Research and Education Investments
l 
l 
l 
The education, science and technology communities on both continents have
been investing heavily in establishing and deploying the respective regional
communication networks, with respective infrastructures, people, laboratories
and other facilities for its use.
This was done mainly with investments made by European and regional
development organizations, country governments and the NRENs.
This was done because of the recognition of the great importance of
communication networks and services, like the internet, TV and similar, and
services built upon them, like access to information, teleconferencing, video on
demand, e-commerce, etc. on the economic and social development and
wellbeing of countries and regions.
ELLA Project, General Presenta?on Europe – Latin America Cooperation
l 
There is a fairly intense and growing collaboration in:
– 
– 
– 
l 
The EU has made very large and continued investments in huge
observatories in Latin America: in Chile and Argentina, e.g.:
– 
– 
l 
Basic sciences
Applied sciences
Industrial R&D
Optical and Radio Astronomy Observatories (ALMA, ESO, ...)
Cosmic Ray Observatory (Pierre Auger)
There are many advanced laboratories in Europe, e.g. for
– 
– 
– 
– 
– 
Structure of matter (CERN, ...)
Plasma energy generation (ITER, ...)
Molecular Biology (EMBL, ...)
Instrumentation (NOVA, ...)
Application-oriented R&D (Fraunhofer Gesellschaft, ...)
ELLA Project, General Presenta?on 11 Digital connectivity demands for
R&D & Education
l 
The science and education communities engaged in cooperative or consulting
work between Europe and Latin America, need at both sides high-quality, highcapacity, cost-effective communications access for:
– 
Big Data -- collection, transmission and storage of huge and quickly growing volume of data and
information and information extraction from it
l  cloud computing, with huge data centres established at quasi-optimal locations (availability of
cheap and abundant electrical energy, reduced energy demand for equipment cooling, very
good data links – low latency, high capacity, installation safety)
l  sensor deployment and data for security, natural resources, civil defence, automation and
similar purposes and the internet of things
l  high and quickly growing rate of personal data generation and use (information use,
photography, video, social applications, citizen science, etc.) by a large and growing number of
mobile users, both in business and privately (high rate of mobile phone and tablet adoption)
l  human-human and human-machine interactions in virtual space for different kinds of e-meeting,
e-learning and e-participating, e-observation and e-production situations – e-workfor fixed and
mobile applications such as:
– 
– 
– 
– 
Scientific and technical observations
Consulting and collaboration
Meetings
Education, training and dissemination
ELLA Project, General Presenta?on 12 Digital connectivity demands for
R&D & Education (II)
l 
Pressure on the scientific, financial, business and government communities to
find solutions to the urgent issues
– 
– 
– 
l 
Research, development and services are becoming more dependent on
international cooperation:
– 
– 
l 
of Humanity (health, climate change, natural disasters, education, social interactions,
…)
of Governments (same as above + international relations, governance)
of businesses (e-commerce regulations, finances, international commerce,
international labour, e-labour relations, …)
growing size, complexity and cost of projects and services and users of services (e.g.
CERN-LHC, ESO-VLT, Very Large Scale Integrated Circuits’ projects, airplane
projects, Panama Channel expansion, drug development, health care, climatology
and meteorology forecasts, social services, …) and consequent increased costs
necessity or convenience of involvement of more people and of people from different
parts of the world (due to specific skills, adequate location, cost reduction)
Education is becoming more international and more competitive (improved
competitiveness of educational institutions and students, global education,
virtual education environments) for higher productivity and quality of results and
better working conditions.
ELLA Project, General Presenta?on ELLA shared between all kinds of users
l 
l 
l 
l 
l 
The needs of the business communities are not different from those of the
R&D and Education communities, and for similar reasons, even if the
applications are somewhat different.
Thus, a communications link like ELLA would be a very welcome contribution
to improving conditions for all communities with demands for dynamic
interaction between Europe and Latin America. This includes almost
everybody.
By sharing the same high capacity link all communities will gain, without any
interference between the different applications.
Through the next slides it will be shown that a link like ELLA is a feasible,
cost-effective and self-sustaining project, which can finance its expansion of
capacity and timely renewal.
ELLA is a profitable undertaking.
ELLA Project, General Presenta?on 14 Why international data transfer will tend to grow
strongly?
l 
In the digital economy:
– 
– 
– 
– 
– 
l 
The greater value is in the products and infrastructures of the digital economy
–  X as a Service: X = Data; Information, Computing, Software, ...
–  Data centres for cloud computing, BIG DATA, e-Engineering, High Performance
Computing and Visualisation, ...
Data Centres and Digital Services tend to be located at, or controlled from, more advanced
(or more obstinate) countries;
Huge data centres tend to be located at relatively few, strategically adequate locations
(energy source, cooling, security, costs …)
Data users and data sources are (almost) everywhere;
The connection between users, data sources and data centres tend to be long-distance, or
even international and intercontinental.
Examples:
l 
l 
I made a video with my mobile phone, sent it to YouTube and e-mailed my friends to view it.
I uploaded about 50MB to the YouTube server in the USA, my friends, some in Europe,
some in South America, some in North America, downloaded it some 20 times, and made
some comments about it, uploaded some related videos, …
I have sent to a crowd-sourced research project, located in Holland, together with some
2,000 other people, photos and location coordinates of a certain kind of plant found in my
neighbourhood …
ELLA Project, General Presenta?on 15 ELLA is a Rational Opportunity and Alternative
l 
l 
l 
l 
l 
Today almost all digital traffic between Latin America and Europe is routed
through the United States.
Typically the cost of a link between Latin America and the USA is 20 times
more than the link between the USA and Europe.
Data traffic demand has been escalating rapidly in recent years and will
continue to do so. This is caused by broadband (fixed and mobile) access
growth and increasing demand for higher connection speeds and growing use
of Internet applications, especially those with rich data contents (video,
images, audio)
On the other hand, new technologies are increasing the capacity of submarine
cables, even allowing upgrades to the capacity of existing submarine cables.
The deployment of a submarine cable linking Latin America directly with
Europe (ELLA - European Link with Latin America) would be well positioned to
capture the traffic between Latin America and Europe, offering lower prices
and better services (lower latency).
ELLA Project, General Presenta?on 16 Submarine Cables Linking Latin America to the
USA and Europe
CABLE
OWNERS
READY FOR
SERVICE
CURRENT
CAPACITY
(TBPS)
CAPACITY
2015 (TBPS)
1
South America-1 (SAm-1)
Telefonica
2001
2.2
10.0
2
South American Crossing (SAC)/Latin
American Nautilus (LAN)
Level 3
2000
1.44
1.44
3
GlobeNet
Oi
2000
1.28
7.0
4
Americas-II
Various (*)
2000
0.08
0.08
5.0
18,5
Total
ELLA Project, General Presenta?on 17 Market Segmentation
Internet
Private lines
Voice
Television
l 
l 
Sub-segments served
Uses of bandwidth
Customer Examples
• Internet Service Providers • International access to • Oi, Telecom Italia, GVT
(ISPs)
Internet backbone.
• RedCLARA, Telebras
• Service Providers (cloud • Point-­‐to-­‐point data • BT, DT, ….
• International Long Distance • International traffic
• Oi, Embratel, GVT, TIM
• Cable
• Distribution of TV channels
• Embratel/NET, Sky, GVT
• Broadcasting
• Live transmission, image • Globo, SBT, Record, Band
services, VAS, Finance)
• Corporate networks
providers
transmission
exchange
Telecommunications providers are the potential clients for ELLA.
They will buy bandwidth mainly to connect Internet Service Providers (ISPs) or
Internet backbones in Latin America to Internet exchange points or hosts in
data centres in Europe and vice-versa.
ELLA Project, General Presenta?on 18 Demand assumptions
DEMAND ASSUMPTIONS
Internet
Starting point
Growth trends
Route L A –
Europe estimate
Other
• 2010 Demand • Source: UIT
• Represent 15% of total 2010 demand • CAGR growth 50,8% 2010 – 2019
• 60% peak 2014 and 2016
• CAGR growth 23,5% 2019 – 2027
• 10% historical growth
• 20% of total demand
• 20% of total demand.
• Global servers distribution.
ELLA Project, General Presenta?on 19 Market Demand Forecast
ELLA Project, General Presenta?on 20 Potential Demand
Demand for the route La?n America -­‐ Europe was es?mated conserva?vely as 20% of the total South America demand l 
l 
l 
20% of all Internet hosts are in Europe.
3 of the top-10 data sources are in Europe
Operators’ traffic matrices indicate that this percentage ranges between 17% and
25%
ELLA Project, General Presenta?on 21 ELLA Competitors
CABLE
OWNERS
READY FOR
SERVICE
POTENTIAL
CAPACITY 2015
(TBPS)
1
South America-1 (SAm-1)
Telefonica
2001
10.0
2
South American Crossing (SAC) /
Latin American Nautilus (LAN)
Level 3
2000
1.44
3
GlobeNet
Oi
2000
7.0
4
America Móvil-1 (AM-1)
América Móvil
2012
30*
5
Wasace
Several investors
2014
40
TOTAL
ELLA Project, General Presenta?on 88,4
22 Latency advantage of different routes from LA to
Europe
•  The latency introduced by the cable between Fortaleza (Brazil) and London
(UK) will be much lower for the direct route (geographic latency only).
ELLA Project, General Presenta?on 23 ELLA Market Share
l 
The basic assumptions used to calculate market share for each year are:
– 
– 
– 
ELLA fair share multiplier: 2
Churn for ELLA and others: 1.3%
Number of competitors including ELLA: 6 (2015-2017), 7 (2018-2020), 8 (2021-2023) and 9
(2024-2027).
ELLA Project, General Presenta?on 24 Prices in LA-US Route
NET PRICE
(USD)
MONTHLY
ANNUAL
10 Gbps
100.000
1.200.000
2,5 Gbps
50.000
600.000
STM-4
25.000
300.000
The assumed strategy is to have
the same market price of a Santos
to USA link for the Latin America to
Europe link.
ELLA Project, General Presenta?on 25 Business Models
l 
l 
The independent company model was considered for purpose of
the analysis.
49% of projects (2008-2012) are in consortium (submarine cable
report 2012).
ELLA Project, General Presenta?on 26 ELLA Selected Route
ELLA Project, General Presenta?on 27 Project Phases
l 
PHASE 0
– 
– 
l 
PHASE 1
– 
– 
– 
l 
Deployment of a redundant submarine cable between Fortaleza and the Canary
Isles.
Starting date of commercial operation: January 2015
Operation with termination agreements with other carriers for the traffic between
Fortaleza and Santos and between the Canary Isles and Europe.
Deployment of own terminations:
l  Single submarine cable between Fortaleza and Santos.
l  Single submarine cable between the Canary Isles and Portugal.
Starting date of commercial operation of own terminations: January 2019
PHASE 3
– 
– 
Regular operation with agreements with other carriers to provide termination
redundancies.
Increased occupation of potential capacity
ELLA Project, General Presenta?on 28 ELLA Capex
ROUTE
ROUTE
LANDING
STATIONS
INITIAL CAPEX
(M USD)
1TB
TOTAL CAPEX
20TB CAPACITY
(M USD)
Alternative 1
Fortaleza
Canary Isles
2
196
386
Termination Brazil
Santos
Fortaleza
+1
106
201
Termination Europe
Portugal
Canary Isles
+1
43
138
4
345
725
TOTAL
ELLA Technical Specifica?ons FEATURE
DESCRIPTION
Proposed System
Repeated
Design Life
25 years
Number of terminal stations
4 stations
Number of Fibre Pairs
2
Equipped Fibre Pairs
1
Design Capacity
Initial Traffic Capacity
Network Protection
ELLA Project, General Presenta?on 100 x 100 Gb/s per fibre pair for all segments
1 x 100 Gb/s on 1 fibre pair
At SDH level
29 ELLA Business Case
ELLA Project, General Presenta?on 30 Sensitivity Analysis
CHANGE FROM BASE CASE
Base case
--
PAYBACK
(YEARS)
IRR
NPV (M USD)
6,8
29,2%
256,5
Lower Market share
fair share factor from 2.0 to 1.5
7,5
22,6%
123,0
Lower Price
Annual discount rate of prices of 15%
7,5
21,7%
100,0
Higher Termination cost
Phase 1: from 40% to 50%
Phase 2: from 10% to 15%
7,2
26,4%
203,7
•  The business case proves robust against fluctua?ons. ELLA Project, General Presenta?on 31 Scenario Analysis
PAYBACK
IRR
NPV (US$ MILLION)
Base
6,8
29,2%
256,5
Aggressive
5,2
41,5%
539,4
Low demand
7,5
22,4%
115,2
SCENARIO
Scenario Premises SCENARIO
DEMAND
MARKET SHARE
PRICE
Teleco estimates LA-EU
2,0x fair share
20% annual market drop
up to 2019
Aggressive
Teleco estimates LA-EU
and LA-US
3,0x fair share LA-EU
Up to 5% market share
LA-US
20% annual market drop
up to 2019
+ additional 15%
discount for market
prices
Low demand
Market demand provided
by RedClara
2,0x fair share
Product mix according to
Teleco estimative
Base
ELLA Project, General Presenta?on 32 20% annual market drop
up to 2013
Aggressive Scenario
ELLA Project, General Presenta?on 33 Low Demand
Product Mix 75% 25% ELLA Project, General Presenta?on 68% 65% 34% 57% 35% 3% 49% 36% 10% 44% 39% 31% 41% 38% 39% 41% 16% 20% 24% 28% 34 STM -­‐ 4 Low Demand
ELLA Project, General Presenta?on 35 Main Conclusions
l 
The business case analysed here is very attractive and robust,
offering above average returns and high upside potential:
– 
– 
– 
– 
– 
ELLA’s prices for the route LA – Europe will be the same as market prices
for the route LA – USA.
The expected resulting market share is 9.6% in the first year and reaches
26.9% in 2020.
Projected revenues are expected to reach US$ 269 million in 2021.
The estimated net present value of the project is US$ 256 million, which
translates into an IRR of 29.2% and a payback period of 6.8 years for the
investment (after a three year investment period with no revenues).
The financial results prove robust against fluctuations in prices and market
share. In the base case, the NPV is still positive even if the annual market
price discount rate is 15% higher (assuming unchanged market share) or if
ELLA’s market share is lower (fair share multiplier 1.5).
ELLA Project, General Presenta?on 36 Main Conclusions
l 
In addition to the base case, low demand and aggressive
scenarios were developed.
– 
– 
In the low demand scenario, which assumes a 18.8% CAGR (2014-2017), the
project is still economically feasible with an IRR of approximately 22.4% and a
payback of 7.5 years.
In the aggressive case, assuming an additional 15% price discount on ELLA
prices, the projections are: revenues of US$ 429 million in 2021, an IRR of
approximately 41% and a payback period of 5.2 years
l 
The main risks for the ELLA project are of market, operational,
technological and macroeconomic natures.
l 
The strategic importance of ELLA and its relevance for the not-forprofit international activities calls for a strong political and
economical support from public funding bodies.
ELLA is an ideal case for public-private partnership
ELLA Project, General Presenta?on 37 Alternative Routes
ELLA Project, General Presenta?on 38 Alternative Route Scenarios
ROUTE
ALTERNATIVE
1
(Fortaleza
Canary Isles)
2
(Santos
Canary Isles
Portugal
Fortaleza)
3
(Santos
Canary Isles)
4
(Santos
Fortaleza
Canary Isles)
INITIAL
CAPEX
(M USD)
TERMINATION
OPEX
(% OF
REVENUES)
RESULTS
LOW DEMAND
RESULTS
BASE
RESULTS
AGRESSIVE
40%
Payback = 6,2 years
IRR = 23,2%
NPV = US$ 102 MM
Payback = 5,5 years
IRR = 30,2%
NPV = US$ 221,7
MM
Payback = 4,3 years
IRR = 43,9%
NPV = US$ 462,6
MM
0%
Payback = 7,7 years
IRR = 15,4%
NPV = US$ 10,5 MM
Payback = 6,7 years
IRR = 21,2%
NPV = US$ 188,9
MM
Payback = 5,1 years
IRR = 32,0%
NPV = US$ 575,0
MM
20%
Payback = 8,1 years
IRR = 14,1%
NPV = - US$ 22,2
MM
Payback = 6,8 years
IRR = 20,4%
NPV = US$ 145,8
MM
Payback = 5,2 years
IRR = 31,1%
NPV = US$ 471,6
MM
20%
Payback = 8,0 years
IRR = 14,1%
NPV = - US$ 20,5
MM
Payback = 6,9 years
IRR = 19,9%
NPV = US$ 126,2
MM
Payback = 5,3 years
IRR = 30,4%
NPV = US$ 437,6
MM
196
443 +44
343+88
375+44
ELLA Project, General Presenta?on 39 Selected Route Alternatives
ROUTE
ALTERNATIVE
INITIAL
CAPEX
(M USD)
TEMINATION OPEX
(% OF REVENUES)
Alt. 1
(Fortaleza Canary Isles)
196
40%
Payback = 6,2 years
IRR = 23,2%
NPV = US$ 102 M
Payback = 5,5 years
IRR = 30,2%
NPV = US$ 221,7 M
Payback = 4,3 years
IRR = 43,9%
NPV = US$ 462,6 M
Alt. 1 +
terminations
345
10%
Payback = 6,7 years
IRR = 20,0%
NPV = US$ 103,2 M
Payback = 5,9 years
IRR = 26,2%
NPV = US$ 264,4 M
Payback = 4,6 years
IRR = 38,4%
NPV = US$ 614,8 M
Alt. 1 +
terminations
4 years latter
196+ 149
40% up to 2018
10% from 2019 …
Payback = 7,5 years
IRR = 22,4%
NPV = US$ 115,2 M
Payback = 6,8 years
IRR = 29,2%
NPV = US$ 256,5 M
Payback = 5,2 years
IRR = 41,5%
NPV = US$ 539,4 M
Alt. 1 +
terminations
3 years latter
196+ 149
40% up to 2017
10% from 2018 …
Payback = 7,2 years
IRR = 22,8%
NPV = US$ 125,3 M
Payback = 6,4years
IRR = 29,8%
NPV = US$ 274,9 M
Payback = 5,4 years
IRR = 42,5%
NPV = US$ 574,4 M
ELLA Project, General Presenta?on RESULTS
LOW DEMAND
40 RESULTS
BASE
RESULTS
HIGH DEMAND
References (1)
Hybrid Reality: Thriving in the Emerging Human-Technology Civilization
By: Ayesha & Parag Khanna
TED Books, 2012
The Mobile Wave: How Mobile Intelligence Will Change Everything
by Michael Saylor
Vanguard Press
I Live in the Future & Here Is How It Works
By Nic Bilton
Crown Business, New York, 2010
Socioeconomic Impacts of Wireless Technology
A review of Opportunities and Challenges in Health Care, Finance, Education and Community
Empowerment
BSR ( www.bsr.org ) CTIA ( www.ctia.org )
BSR_CTIA_Social_Impacts-Wireless_Tech.pdf
Working Group on Broadband and Science: Final Report
Broadband Commission for Digital Development
www.broadbandcommission.org
ITU, UNESCO, EU
WG_Broadband_Science_Final_Report.pdf
Broadband Targets for 2015
The Broadband Commission for Digital Development
ITU, UNESCO
ELLA Project, General Presenta?on 41 References (2)
Submarine Cables and the Oceans: Connecting the World
UNEP World Conservation Monitoring Centre
International Cable Protection Committee
ICPC-UNEP_Report.pdf
Extracting Value f rom Chaos
IDCIVIEW
June 2011
By John Gantz and David Reinsel
IDG-State Of The Universe- JUN2011-1142-AnotNMe.pdf
Project ELLA – NA4
Final Report – Alternate Analysis
Telco, June 29, 2012
Project ELLA - Report 7 v01-RevNMe
Project ELLA – NA4
Final Report
Telco, June 14, 2012
Project ELLA - Report 5 v06-RevNMe
ELLA Project, General Presenta?on 42 Document Information
l 
l 
l 
l 
Authors:
–  Teleco
–  ELLA Project
Revisors:
–  Florencio Utreras
–  Nicolau Meisel
–  Michael Stanton
–  Fernando Liello
Graphic Arts and Programming:
–  Teleco
–  Nicolau Meisel
Last revised: January 18, 2013
© ELLA Project, 2012
ELLA Project, General Presenta?on 43 Feasibility Study for a direct Europa – Latin America Link
Grant Agreement Number 283396 Deliverable 7.1.1 END
Communication and marketing material
General ELLA Project Presentation
November 29, 2012
ELLA Project, General Presenta?on Project ELLA
(European Link
to Latin America)
South America Traffic Forecast
LA-EU Expected Traffic Growth
Recent data released by
UIT shows 103% growth
in 2011. For the period
2019 – 2027 a 23.5%
CAGR growth was
considered.
Growth trends for
Internet were derived
from expected growth
rates for access speed,
number of users and
utilization per user in
mobile and fixed
services.
The Current Situation of Cables
The route US-Europe has 8
cables with around 15.6
Tbps lit capacity and 49.5
Tbps demonstrated design
capacity (Submarine
Telecom Industry report
2012).
Atlantis-2 is the only cable
that connects Latin America
to Europe directly. The cable
has a maximum bandwidth
capacity of 160 Gbps
(capable of transporting only
a small portion of the LA Europe traffic)
Investment Opportunity
l 
Today the majority of traffic between Latin America and Europe is routed through the
United States. Several submarine cables link Fortaleza (Brazil) to Florida (US)
l 
The business opportunity comes with the explosive growth of the data traffic. According
to Cisco Visual Networking Index - that forecasts 49% (CAGR) IP traffic Growth for
Latin America 2011 – 2016 (Brazil 53%), the dramatic jump in Internet traffic will occur
as a result of four key factors:
1) More devices
2) More people
3) Faster speeds
4) More videos
l 
Then, the construction of a Submarine cable linking Latin America directly to Europe
(ELLA - European Link to Latin America) will be a unique investment opportunity.
Cable Route Selection
l 
Several different routes and terminations were analyzed in order to determine the best
alternative for ELLA.
l 
In Brazil, both Fortaleza and Santos were selected as potential landing station spots:
q 
q 
Fortaleza is much closer to Europe, but is still a long way from the most important
economic centers (São Paulo and Rio de Janeiro).
Santos is far from Europe, but much closer to São Paulo and Rio de Janeiro.
l 
On the other end of the cable, several European landing station spots were analyzed:
q 
United Kingdom, France and Spain: great connectivity to the rest of Europe, but these
options is all considerably farther from Latin America than Portugal and the Canary Islands.
For that reason, these options weren’t considered.
q 
Portugal: Great connectivity to the rest of Europe and relatively close to Latin America
q 
Canary Islands: Closest alternative to Latin America. Although there are several cables
connecting the Canary Islands to Europe, it might be very expensive to hire these
additional terminations to Europe (deals should be made before hand).
Selected route for ELLA cable.
PHASE 0
Deployment of a redundant submarine
cable between Fortaleza and Canary Islands.
PHASE 1
Operation with termination agreements to carry
the traffic from Fortaleza to Santos and from
Canary Island to Europe.
Deployment of terminations.
Single submarine cable between Fortaleza and
Santos.
Single submarine cable between Canary Island
and Portugal.
Starting date of terminations commercial
operation: January 2019
PHASE 2
Regular operation with agreements to guarantee
terminations redundancies.
Capacity fulfillment
Capital Expenditures
• 
ELLA’ capital expenditures (Capex) can be grouped in two main categories:
q  Submarine Cable and equipment
q  Land station construction
ü 
Table below presents the project estimated Initial Capex, for Alternative 1 (US$ 196 million),
being funded by 80% (US$ 156 million), with implementation from 2012 until 2014.
ü 
Investments for Total Capex (US$ 345 milion, 20TB Capacity and Termination Brazil and
Europe), will be made from 2016 to 2017 and will be financed with the results of the project
ROUTE
LANDING
STATIONS
INITIAL CAPEX
(MM USD)
1TB
Alternative 1
Termination Brazil
Termination Europe
TOTAL .
Forlaleza
Canary Islands
Santos
Fortaleza
Portugal
Canary Island
TOTAL CAPEX (MM
USD)
20 TB
CAPACITY
2
196
386
+1
106
201
+1
43
138
4 345 725 Financial Plan and Scenarios
The financial plan model was made for three scenarios (results below), all of them with
expressive NPV .
v Base
Scenario, based on basic and conservative forecasts for market demand, ELLA’
market share and pricing.
v Aggressive
Scenario considers the same market demand of the baseline scenario, but at
a price 15% lower for the services offered by ELLA. With a lower price you can gain a greater
market share in Europe and LA-route a portion of LA-US traffic.
v Low
demand Scenario considering a lower demand in the market.
Scenario
PAYBACK
IRR
NPV
Analysis
YEARS
%
(US$ MILLIONS)
Base
6.8
29.2%
256.5
Agressive
5.2
41.5%
539.4
Low Demand
7.5
22.4%
115.2
Base Scenario
Projected revenues are expected to reach
US$ 269 million in year 2021.
The estimated NPV is US$ 256 million,
which translates into an IRR of 29.2% and
a payback period of 6.8 years for the
investment (after a three year investment
period with no revenues).
Agressive Scenario
This scenario assumes an additional 15%
discount on prices. Because of the lower
price, a higher market share was assumed on
this situation.
The projections are: revenues of US$ 429
million in 2021, an IRR of approximately 41%
and a payback period of 5.2 years.
Low Demand Scenario
In the scenario, expected economics
are still viable with revenues of US$ 155
million
in 2021, an IRR of approximately
22.4%
and a payback of 7.5 years.
Summary
l 
There is no direct cable with significant capacity between Latin America and Europe and most
of this traffic is routed today through the United States.
l 
The construction of a submarine cable linking Latin America (LA) directly to Europe (EU) will
be well positioned to capture the traffic between Latin America and Europe offering lower
prices and better services.
l 
The opportunity comes with an explosive growth of the demand for high capacity data
transport. Projections show that demand (Tbit/s) will grow rapidly at around 32,1% CAGR
between 2015 – 2017. From this traffic between 20 and 30% actually goes to Europe.
l 
The base case is very attractive and robust, offering above average returns and high upside
potential. Projected revenues are expected to reach US$ 269 million in year 2021. The
estimated net present value of the project is US$ 256.5 million, which translates into an IRR of
29.2% and a payback period of 6.8 years for the investment. Also in the low demand scenario
there is a payback of 7.5 years and in the aggressive case, are expected an IRR of
approximately 41% and a payback period of 5.2 years
Conclusions
l 
l 
We have studied different scenarios of traffic
growth and business strategies. All the
scenarios lead to solid earnings and a
payback period of not more than 7 years.
This proves our initial statements about the
robustness of the business case.