Cable & Wireless Bermuda Ltd. has announced plans to invest $22 million over the next two years in a fibre optic telecommunications cable linking the Island and the US. And in a statement released yesterday, C&W added that it was likely to drop its plans to buy KeyTech Ltd. — the parent company of the Bermuda Telephone Company — because of uncertainty over Government’s imminent telecommunications reforms.

The new 800-mile cable is due to be operational by the end of October and has 700 times more capacity than the ageing submarine cable it will replace.

C&W has two undersea cables, both of which are outdated and near their capacity-carrying limit. Bermuda is also served by the more advanced, higher-capacity Brasil Telecom cable.

The company has also decided to dismantle its Earth Station antenna — the huge satellite dish in Devonshire visible from Middle Road — next month. The antenna was built in April 1984 and C&W said “its purpose had been replaced by fibre-optic technology”.

C&W Bermuda chief executive officer Eddie Saints announced the cable investment in London at the Bermuda International Business Association’s (BIBA) annual forum, which has been attended by Finance Minister Paula Cox and Environment, Telecommunications and E-Commerce Minister Neletha Butterfield.

“The new undersea cable will satisfy the growing demand for diverse, reliable high-speed data and broadband services, both domestically and internationally,” Mr. Saints said.

He added this was one in a series of capital investments that C&W planned for Bermuda in the near future.

C&W’s proposed cable has not stopped the Government in its efforts to seek a company to install another new undersea cable for the Island. A statement from Ms Butterfield’s Ministry yesterday “acknowledged Cable and Wireless’s commitment to upgrading their existing international communications link, showing their continued commitment to the business and residential sectors in Bermuda.

“The public will be aware of the Minister’s intent to tender for a new submarine cable. A draft of the tender was recently issued to existing licensed carriers who provide domestic services. As long as there is continued interest by other telecom carriers, Minister Butterfield intends for the tender process to proceed.”

C&W’s announcement that it is unlikely to proceed with its plan to buy KeyTech may come as a surprise to many in the industry.

The international telecommunications giant attempted a $205 million takeover last July, but the offer was considered too low by KeyTech and the Government also opposed the deal.

Since then the Government has proposed reforms for the telecommunications industry that would abandon the 60/40 ownership rule, thereby lifting restrictions on foreign ownership.

If such reforms become law, it would effectively remove Government opposition to a C&W’s takeover of KeyTech, which owns cell phone provider M3 Wireless Ltd., internet service provider Logic Communications Ltd. and Bermuda Yellow Pages Ltd, as well as BTC. Government consultation with the industry has taken place and the public has been invited to have its say on the reforms.

Reaction has been mixed. Some argue the changes would lead to a monopoly or duopoly, with foreign-owned giants wiping out local ownership of telecom firms. Others say the reforms are necessary to open up the marketplace and bring in the necessary investment to introduce the latest technology.