Meta to Build Massive Subsea Cable, Become Sole Owner
Meta Platforms Inc. (META) is planning to construct a massive fiber-optic subsea cable and become its sole owner. This ambitious project, spanning 40,000 kilometers, would provide Meta with a dedicated pipeline for data traffic worldwide.
The cable's planned route will stretch from the east coast of the United States to India via South Africa, and then back to the west coast of the United States from India via Australia. This strategic route will significantly enhance Meta's global connectivity and data transfer capabilities.
Sunil Tagare, a subsea cable expert, estimates that the project will require an initial budget of $2 billion, with costs gradually exceeding $10 billion over the course of several years. This substantial investment reflects the immense scale and importance of the project for Meta's future.
Meta's decision to build its own subsea cable is driven by several factors. As the second-largest driver of internet usage globally, thanks to platforms like Facebook, Instagram, and WhatsApp, Meta requires a robust and reliable infrastructure to support its massive user base and data traffic. Owning its own subsea cable will provide Meta with greater control over its data and network performance, enhancing its overall efficiency and competitiveness.
Furthermore, Meta's significant investments in artificial intelligence (AI) are expected to further drive the need for a dedicated data infrastructure. AI applications require vast amounts of data and processing power, which can be facilitated by a high-performance subsea cable.
The project is expected to take five to ten years to complete, demonstrating Meta's long-term commitment to building a robust and independent infrastructure. This move positions Meta as a major player in the global data infrastructure landscape, alongside tech giants like Alphabet Inc. (GOOG, GOOGL), which is involved in 33 different subsea cable routes.
Analysts have praised Meta's decision, highlighting its potential to strengthen the company's AI capabilities and infrastructure. Justin Post of BofA Securities has identified Meta as a top AI pick, citing its advancements in generative AI and infrastructure development. He also noted the increasing adoption of Llama and Meta AI.
Investors can gain exposure to Meta through various exchange-traded funds (ETFs), including iShares Global Comm Services ETF (IXP) and Vanguard Communication Services ETF (VOX).