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By Francesco Guarascio and Phuong Nguyen
HANOI (Reuters) - Singaporean asset manager Keppel and Vietnamese conglomerate Sovico Group are discussing plans for new undersea fiber-optic cables that would boost the region's data centre industry, people familiar with the discussions said.
Southeast Asian countries, a major junction for cables connecting Asia to Europe, are seeking to expand their networks to meet booming demand for AI services and data centres. Vietnam alone plans to have 10 new submarine cables by 2030.
Undersea cables are at the centre of the Sino-American tech war, with the two powers vying to win contracts, especially in Asia, to build and maintain the strategic infrastructure that carries most internet data, including sensitive information.
Under one plan under discussion, a cable would be laid to link Vietnam directly with Singapore, five people directly involved or briefed on the matter said.
It would cost $150 million, according to one source with direct knowledge of the talks.
This option is favoured by Sovico, but talks with Keppel on the direct cable are in flux and no agreement has been reached yet, two sources with direct knowledge said.
They added that Keppel prefers a more ambitious cable plan involving a consortium of investors.
Under that second plan, the connection to Vietnam developed by Sovico would be an offshoot of a longer cable, three people said, with one noting it would run from Singapore to Japan with links to countries along the route.
The sources declined to be named because the information was not public.
Sovico, a conglomerate whose operations include aviation and banking, has recently announced plans on data centre development. It did not respond to requests for comment.
Keppel agreed in November to buy an AI-ready data centre facility in Japan. Singapore is a major hub for data centres and undersea cables, but the small island-state has nearly saturated its data usage capacity.
A spokesperson for Keppel declined to answer Reuters questions about the two cable plans, saying: "We do not comment on market speculation."
A Sovico executive mentioned the company's cable plans with Keppel late last month in an internal meeting with Vietnam's Prime Minister Pham Minh Chinh and other companies involved in the digital economy, one of the meeting participants told Reuters.
Vietnam's government office and the foreign affairs ministry did not reply to requests for comment.
US-CHINA COMPETITION
Under the preliminary plans, no decision had been made about who would build either of the cables, but two people familiar with the talks said Chinese contractors would not be involved in the possible direct link between Vietnam and Singapore.
Sovico was briefed by U.S. officials about alleged risks linked to choosing Chinese contractors for the cables, two people with direct knowledge of the talks told Reuters.
U.S. officials and consultants have organised multiple briefings with Vietnamese and Singaporean officials in recent months to discourage them from using HMN Technologies, part of a global campaign to contain the rise of the Chinese contractor, Reuters exclusively reported in September.
The two projects are separate from possible investments previously announced by Vietnamese companies in four new undersea cables, of which two would be built by Japan's NEC, and one by China's HMN Tech to connect Vietnam to existing international cables, according to public information.
The fourth was announced in April by Vietnam's state-owned telecom firm Viettel and Singapore's Singtel and would link Vietnam directly to Singapore under a preliminary plan. No building contract has been announced.
Vietnam, with a population of nearly 100 million, is a large market for online platforms, but is currently connected to the global internet infrastructure through only five undersea branches to international cables.
Its plans to triple the number of its cables are seen by industry experts as a possible boost to its chances of becoming an alternative regional data centre hub, despite power supply issues and strict data regulations.
(Reporting by Francesco Guarascio, Khanh Vu and Phuong Nguyen in Hanoi and Fanny Potkin in Singapore; additional reporting by Yantoultra Ngui in Singapore; Editing by Kay Johnson and Sonali Paul)
