Large cables under the sea cost several million dollars. They are usually paid for by a consortium of technology or telecommunications companies who can spread the costs and risks, as well as take responsibility for any cable landings that end up in their countries.
In the case of SeaMeWe-6, more than a dozen companies were financing the cable, the people said, and there was immediately a split in the group over who would need to reach a consensus to select a contractor for the project.
China Telecom, China Mobile and China Unicom were fully behind HMN Tech, which came in with bids of around $500 million. Microsoft, Orange and India’s Bharti Airtel expressed concern about the risk of possible US pushback on HMN Tech’s involvement. Still, it was hard to argue with the price. SubCom’s bid was closer to $750 million.
Over a series of video calls in mid-2020, the members of the consortium verbally agreed that HMN Tech would manufacture the cable. The subcom will hold the reserve in case the Chinese firm pulls out or fails to meet the conditions of its offer.
But behind the scenes, SubCom and the US government were sowing seeds of doubt about whether HMN Tech was the best company for the job.
Subcom had already successfully applied for a loan from the Federal Export-Import Bank of the United States to support its bid. It also received advocacy assistance from the Department of Commerce, which increasingly mobilized US embassies around the world to trust union members in their host countries.
US ambassadors to at least six countries, including Singapore, Bangladesh and Sri Lanka, wrote letters to local telecom carriers participating in the deal, according to people involved. One of these letters, seen by Reuters, said that choosing Subcom is “an important opportunity to enhance commercial and security cooperation with the United States.”
Separately, ambassadors and senior diplomats met with executives of foreign telecom companies in at least five countries. Message: HMN Tech may be subject to US sanctions in the near future. That in turn would make it harder for telcos to sell bandwidth because their biggest potential customer – US tech firms – would not be allowed to use cable.
A senior Asian telecommunications executive recalled a meeting with a top US diplomat and a US digital trade attache in mid-2020. US officials explained how the ban on HMN Tech would render Cable virtually useless, providing him with a printed spreadsheet with economic analysis.
“They said we would go bankrupt. It was a persuasive argument,” the executive told Reuters.
Two other Asian telecom executives in the consortium told Reuters they met with both Chinese and US diplomats, who urged them to back HMN Tech and Subcom, respectively.
By the end of 2020, several consortium members, including Bangladesh Submarine Cable Company Limited, India’s Bharti Airtel, Sri Lanka Telecom, France’s Orange and Telecom Egypt, told their partners that they were having second thoughts about choosing HMN Tech as a supplier. Were, mostly fear of sanctions.
None of these companies responded to requests for comment.
In February 2021, Subcom and HMN Tech, with consortium partners at loggerheads, were given a chance to submit the “best and final proposal” by the group. SubCom lowered its bid to close to $600 million. But HMN Tech was now offering to make the cable for $475 million.
Several consortium members, including Microsoft, Singapore Telecommunications Limited (Singtel) and Orange, argued to the other participants that Subcom was offering a better deal when the risk of sanctions was factored into the bids. The three state-owned Chinese companies strongly disagreed. All the companies declined to comment.
