The Tata-controlled Videsh Sanchar Nigam Ltd is setting up an undersea cable network between Chennai and Singapore.

The board of VSNL has cleared the $125 million project, which is being touted as the fastest undersea cable in the world.

The cable will have a bandwidth capacity of 5.12 terabits. In the first phase, as much as 320 gigabits of bandwidth capacity will be made available.

The cable will have an operational life of 35 years, which is among the highest in the world among new undersea cable networks.

VSNL has tied the knot with Tyco International, an undersea cable infrastructure giant, which will build the cable. The project is expected to become commercially operative in the second quarter of financial year 2004. Construction of the cable has just begun.

A spokesperson of VSNL, however, declined to comment on the project. Sources, however, say an announcement to this effect will be made within a few days.

Sources said the project will be built at a lower cost than i2I, the Bharti-Singtel joint venture cable which also connects Chennai to Singapore.

The Bharti Singtel venture had invested around $250 million on the 8-terabit undersea cable which is already operational.

VSNL also is part of various consortium undersea cables which touch India. These include the SeaMe3 cable on the Indo Europe route, whose capacity is being increased by 38 per cent.

VSNL is also part of the consortium for building the SeaMe We4 cable, which will be operational in 2005, and that of SAFE, which connects India to Africa and then to Europe.

It also has a tie up with Flag Telecom under which VSNL is the exclusive landing station for the life of the cable.

The ILD company has been looking at expanding its capacity in the undersea  cable routes. Telecom sources say that it was one of the bidders for Flag Telecom and had offered over $100 million.

But the deal was eventually clinched by Reliance group which forked out $207 million to buy the company recently.

Apart from Reliance even Data Access is now planning to get into the act-it has finalised plans to set up an under sea cable network between Mumbai and  Fujairah in the UAE with investors from Saudi Arabia and Bahrain.

The project cost for this network is also around $100 million for an 8 terabit capacity bandwidth.

The Indian demand for bandwidth on the international cables is estimated to be around 5 gigabits for both voice and data.

However, with prices expected to fall dramatically owing to fresh capacities, many experts expect the market to boom in the next few years.