Telecom Egypt, Alcatel sign $125 mln cable deal

CAIRO, Jan 31 (Reuters) - State-controlled Telecom Egypt (ETEL.CA)(ETELq.L) signed a $125 million contract on Thursday with Alcatel-Lucent (ALUA.PA) to build a new submarine cable between Egypt and France.

"This is the first Egyptian cable of the kind and the largest contract in the history of Telecom Egypt," Telecom Egypt Chairman Akil Beshir told a news conference.

The deal, which would make Egypt less vulnerable to Internet disruptions, comes a day after the country had up to 70 percent of its Internet network cut off due to disruption to an undersea cable that also affected the Gulf region and south Asia.

Egyptian Telecommunications Minister Tarek Kamel told reporters at the signing ceremony the new cable deal was not a response to Wednesday's disruption but would boost network service in the most populous Arab country.

The communication cable will connect Sidi Kerir near Alexandria on Egypt's north coast to Marseille in France. Beshir said the cable would also lower the cost of Internet services in the country.

The TE North cable, to be installed over 20 months, would also extend by land to Egypt's Sinai peninsula through two routes, making it the largest capacity cable built by Alcatel, an Alcatel official said.

Georges Krebs, Alcatel's general manager of submarine networks, told Reuters his firm won a tender to build the cable two weeks ago after the Egyptian government granted Telecom Egypt a licence to install and operate it.

Egypt had given two other similar licences to Egyptian companies to build and operate communications cables as it seeks to expand its network, Kamel said without naming the companies. (Reporting by Wael Gamal; editing by Rory Channing)