Georgia's Caucasus Online Invests $40 Mln in Fibre Optic Link to W. Europe via Bulgaria

“We will launch the project on Friday, so this week the traffic will start to flow through the cable,” Caucasus Online chief financial officer Vahan Mgebryan told SeeNews by phone from the Georgian capital Tbilisi.

The optic cable will link Frankfurt in Germany with the Black Sea port of Varna, in Bulgaria, from where it will stretch under the sea to the Georgian port of Poti and then to Tbilisi. The project's total value is $76 million.

Caucasus Online has so far invested $40 million in the project, of which $22 million into deploying the system on the Bulgarian territory and linking Varna and Poti, Mgebryan said. The rest will go for building the fibre optic link from Tbilisi to Georgian neighbour Azerbaijan, which is planned for next year, Mgebryan said.

“The project was delayed by around a month due to the armed conflict in Georgia in August,” he said.

Georgia sent troops in August to retake the rebel region of South Ossetia, which rejected Tbilisi's rule in '91-'92 after months of skirmishes with separatists. Russian forces moved into Georgia in response, driving the Georgian troops out of the rebel region, after which Moscow recognised the region as independent.

Caucasus Online last month borrowed $35 million for the project from the European Bank for Reconstruction and Development (EBRD). As part of the deal, the EBRD acquired a 5.0% equity stake in the company.

The loan is still awaiting a board approval by the EBRD and has not been disbursed yet, Mgebryan said and added that funds are expected to be available until the end of the year.

"It is expected that EBRD as the partner in Caucasus Online will bring greater value in the Georgian telecomunications market and regulation issues," he said.

Caucasus Online (www.caucasus.net), Georgia's largest internet provider with a 75% market share, hired in September last year U.S. undersea communications technology provider Tyco Telecommunications, a business unit of Tyco Electronics, to construct the 1,200 kilometre undersea fibre optic system that will provide high bandwidth connectivity between Poti and Varna.

The system will comprise a two-fibre pair point-to-point link between Poti with Varna and will have an ultimate capacity to transmit 64*10 Gigabit wavelengths on each fibre pair for a total bandwidth of nearly 1.3 Terabits. Onward connectivity from Poti to Tbilisi and the rest of the Caucasus region will be provided on the Caucasus Online terrestrial network.

Caucasus Online has developed a terrestrial link from Varna to Bulgaria's capital Sofia where the link connects to the rest of Europe through service agreements with international carriers.

($ = 0.7904 euro)