An interview with Larry Schwartz, Chairman and CEO of Seaborn Networks

Editor’s Note: When Seaborn Networks’ Seabras-1 cable linking the United States and Brazil entered service in 2017, it was one of the first privately-developed international cable systems to do so since the collapse of the market in 2002.

One of the lessons supposedly learned from that collapse was that private cables were finished.  Pointing to a number of private cables that resulted in their owners filing bankruptcy during the collapse, this system of developing cables was said to be a proven failure.  But as the submarine cable industry roared back to prominence in 2014, Seabras-1 was one of a handful of projects demonstrating that there is a place for private cables in today’s market. 

With Seabras-1 now operational, SubCableWorld was delighted to meet up with Larry Schwartz, Seaborn Networks’ Chairman and CEO, at the sidelines of SubOptic 2019 to talk about his experience developing a private system in this environment and what the future holds.

Larry Schwartz Power100 2019

SCW: What were the conditions like when you were trying to develop Seabras-1?

Mr. Schwartz: Seabras-1 was a major infrastructure project in a period when investors were very cautious about new submarine cables.  Back in 2012 when we started planning Seabras-1, there had been a lot of attempts at building a privately developed cable system.  People said, “Here’s one more.”  We had to prove that we were real and we did that by a series of tangible building blocks.  Funding can come in different ways.  We were able to build up our credibility through major capacity purchases from large international carriers like Tata, from investment by the International Finance Corporation, and from French credit insurer Coface, which backstopped our debt.  Each was a critical building block to establish our credibility.  Even after our project financing was locked down in December 2015, we still had to convince people that we were real.  We pointed to the quality of the organizations that were investing in us. 

Beyond that, Seaborn Networks has a different structure.  Seaborn, as the developer, co-owns the network with our institutional equity partner.  We use a structure that is a little different to the norm in the telecom industry, but is more common in other infrastructure industries.  Seaborn itself owns all of the headcount (SG&A and Ops & Engineering), NOCs and systems to operate the network and its business, which is provided to Seabras on an outsourced basis.  This management-controlled model is unique in the subsea sector and positions Seaborn well as a platform play.

SCW: What is the status of Seabras-1 now?

Mr. Schwartz: Seabras-1 went live in September 2017.  We had the core team hired and fully trained before RFS and we have been growing ever since, with strong customer sales and significant renewals.  Our NOCs are offering full services.  We offer a suite of differentiated capabilities, including circuit activations within 24 hours.  Our focus of course is on driving sales.  We rolled out IP services in Brazil and are in the process of adding a full MPLS capability.  We were also fortunate that the B3 data center serving the Brazilian Stock Exchange went live just after our RFS date as it accelerated the onboarding of our key high frequency trading customers onto our ultra-low latency SeaSpeed path, which is also now attracting a broader range of financial customers to us.

SCW: What are some of your future plans?

Mr. Schwartz: We have a number of options for extending Seabras-1.  We have spare branching units that could be built out to Virginia Beach, Miami, the eastern Caribbean, Forteleza, Cape Town, Rio de Janeiro and southern Brazil.  We also announced our ARBR system between Brazil and Argentina.  These are all projects that would add traffic to Seabras-1. They are all progressing on their own timelines, but suffice to say that we expect most of them to be fully built out within the next few years.

Every submarine cable project moves at its own pace.  And they each have a different approach in terms of how they are marketed. On some, we try to share material milestones where we are looking to prime the market, whereas on others there is no need if the offtake is well established.

We’re proud of what we’ve accomplished, and excited by the future opportunities for growth.  We’ve created jobs and brought new opportunities to Brazil and the US.  We have a great group of people and we’re passionate about this industry.