The cost of repairing an undersea cable suspected of being damaged by a ship’s anchor in February 2024, has eaten away at Seacom’s profitability in the six months to 31 December 2024.
Remgro, a 30% shareholder in Seacom, released its interim results for the same period on Monday and reported that the company’s earnings fell sharply as a result of the cable repair costs.
“Seacom’s contribution to Remgro’s headline earnings for the period under review amounted to R2-million (31 December 2023: R32-million). The decrease in headline earnings relates mainly to once-off cable repair costs incurred as a result of cable breaks experienced just before commencement of the reporting period,” said Remgro’s report.
South African internet service providers and their customers were hit by an abrupt disruption to internet access in late February 2024. It was later discovered that the Seacom, AAE-1 and EIG undersea cables had been damaged off the west coast of Yemen in the Red Sea after Houthi rebels sank the Rubymar, a Belize-flagged commercial ship loaded with 41 000t of fertiliser.
The crew abandoned the 172m ship after dropping one of its anchors, and the vessel drifted for almost two weeks through an area of the Red Sea that’s densely populated with broadband cables.
“It’s generally accepted that the Rubymar dropped an anchor when fired upon and, as a result, it damaged cables in proximity,” said Ryan Wopschall, GM of the International Cable Protection Committee, a group representing subsea cable operators, at the time.
Rerouted
The data running through the cables was soon rerouted and internet services returned to normal for customers. But Seacom faced the daunting challenge of entering the volatile Red Sea region to repair the damage. Operators scrambled to figure out what kind of insurance and security their maintenance companies would require to work in a conflict zone. These factors likely inflated repair costs significantly. The Houthi rebels, meanwhile, who are backed by Iran, vowed to continue attacking vessels until Israel stopped the fighting in Gaza.
Read: Houthi-sunk ship likely snapped Red Sea internet cables
Progress was finally made in July when a ship owned by E-Marine, a subsidiary of Abu Dhabi-based Emirates Telecommunications Group, made repairs to the AAE-1 cable. The ship then remained in the region to repair the other two broken cables, including Seacom’s, despite the menacing presence of the Houthi rebels.
In spite of these headwinds, Remgro said Seacom’s underlying business remains strong.
“The results for the period reflected a positive trajectory, with higher revenue in both the digital services and digital infrastructure business units and a solid performance after normalising the results for the impact of once-off cable repair costsm, it said.
“The business has continued to service demand for enterprise managed services including cybersecurity and cloud services, which has resulted in increased revenue for the Seacom digital services business unit,” said Remgro. – © 2025 NewsCentral Media
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