THREE African companies have signed a memorandum of understanding that should result in a multi-million rand submarine cable system connecting Nigeria and South Africa.

The companies are eFive Telecoms, a South African telecommunication company; Main One, a Nigerian cabling company; and Seacom, a 76percent African-owned company with Shanduka Group having a 12percent stake in it.

The deal will result in a new cable system linking Nigeria to South Africa via landing points in Gabon, the Democratic Republic of Congo, Angola and Namibia.

The new addition will follow the completion of the first phase of the Main One cable project thst connects Nigeria to London by June 2010.

Seacom cable, which became operational in July last year, currently runs from South Africa along the east coast of Africa and to the rest of the world via India and Europe.

Funke Okeke, CEO of Main One, said: "Our plan in 2008 included building two phases, with phase one connecting London and Nigeria through a 7000km cable.

"Phase two would connect Nigeria to South Africa once the right partnership with the right level of funding could be secured."

eFifve Telecoms will be responsible for the project funding arrangements and plans to join forces with Nova Capital Africa to raise about R3billion necessary to manufacture and install the new cable.

Nova Capital Africa is part of Nova Capital LLC, a New York-based emerging markets investment banking group that serves large and middle market companies throughout Africa as well as central and eastern Europe.

"The agreement means we will have to acquire funds for the project, manage and operate the network after it's been installed," said eFive Telecoms managing director Lawrence Mulaudzi.