CONFIDENTIAL DRAFT

June 11, 2007

EASSY PROJECT
---
WEST INDIAN OCEAN CABLE COMPANY LTD

DRAFT TERM SHEET – FOR DISCUSSION PURPOSES ONLY

The following summary terms and conditions relate to the potential financing to be provided to West Indian
Ocean Cable Company Ltd (the” Company or “WIOCC”) a limited liability company registered in
Mauritius. This term sheet does not constitute an offer or commitment by any party and consummation of
the transaction contemplated hereunder is contingent upon negotiation of mutually satisfactory terms and
conditions, approval of the transaction by each party’s respective governing bodies, management and credit
committees and execution of satisfactory documentation. This term sheet may not be released to any party
other than the Company and its Shareholders the WIOCC Operators, and their respective advisors, without
the prior written consent of each of IFC, EIB, AfDB, Proparco/AFD, KfW and DBS (together “the
Lenders”). All definitions in this term sheet shall be as specified herein.

1. Company/Borrower: West Indian Ocean Cable Company Ltd (the “Company” or

WIOCC), a limited liability company registered in
Mauritius.

3. Shareholders: The companies listed in Annex A who subscribe for and

own shares directly in the Company.

Additional parties may become Shareholders subject to

approval by the existing Shareholders and the Lenders.

4. Purpose: Financing for the construction and implementation, of the

Company’s share of the East African Submarine Cable
System (“EASSy”) which is to run along the eastern coast
of Africa connecting the specified countries. The subject
financing is to include funding for the Investment Amount
of US$92.5 million, the Company’s working capital and
preparation expenses,. (See Sources and Uses of Funds
shown in Annex B).

5. Lenders: (i) International Finance Corporation (“IFC”) with

respect to a loan from IFC (the “IFC Loan”).

(ii) European Investment Bank (“EIB”) with respect to a

loan(s) from EIB (the “EIB Loan”).

(iii) African Development Bank (“AfDB”) with respect to

a loan from AfDB (the “AfDB Loan”).

(vi) KFW Entwicklungsbank (“KfW”) with respect to a

loan from KfW (the “KfW Loan”).

(v) Development Bank of Southern Africa (“DBSA”) with

respect to a loan from DBSA (the “DBSA Loan”).

(vi) Agence Française de Dévéloppement (“AFD”) and/or

Proparco, with respect to a loan from AFD and/or
Proparco (the “AFD/Proparco Loan”).

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6. Investment Amount: US$92.5 million, being the Company’s pro-rata portion of
the EASSy cable construction cost See EASSY Cable
construction cost shown in Annex C).
7. Specified Countries: Djibouti, Kenya, Madagascar, Mozambique, Somalia, South
Africa, Sudan, and Tanzania (including Zanzibar). (why are
we listing only the Landing Station parties and not the
remaining EASSy countries, i.e. Burundi, Uganda, etc.)

8. Security Trustee: International ban approved by the Lenders

9. Account Bank International bank approved by the Lenders.

10. Agent(s): Each Lender to be Facility Agent in respect of its particular

Loan.

11. Finance Party(ies): Each Lender, the Security Trustee [and any other Agent(s)
as determined upon full legal due diligence].

12. Amount of Loans (i) IFC Loan: Up to USD17 million million.

(ii) EIB Loan: Up to USD14 million million.
(iii) AfDB Loan: Up to USD14 million million.
(iv) KfW Loan: Up to USD11 million million.
(v) DBSA Loan: Up to USD10 million million.
(vi) AFD/Proparco Loan: Up to USD9 million million.
TOTAL: Up to USD75 million million.

Each of the foregoing a “Loan”, and together, the “Loans”.

Currency and Type: Each of the Loans to be variable rate loans denominated in
US Dollars.

14. Disbursements: In aggregate amounts of not less than US$7.5 million, each
Lender to provide its pro-rata share

15. Cut-off Date for First Disbursement August 30, 2008.

under each Loan:

16. Cut-off Date for Last Disbursement August 30, 2009.

under each Loan:

17. Interest Payment Dates: To be determined (likely semi-annual, June 30, December
31, each year)

18. Repayment Terms: Repayment pursuant to the repayment schedule for each
Loan set forth in Annex D. Amounts repaid (including
prepayments) may not be reborrowed.

For each Loan, a door-to-door tenor of 12 years is expected,

including a 3-year grace period

19. Voluntary Prepayment: Permitted

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20. Mandatory Prepayment : Typical for such transactions, to include:

(i) Change of ownership (to be defined).

(ii) Illegality.

(iii) Cash receipts of the company in excess of permitted

operating expenses and other defined allocations to be
used for senior loan prepayments as described in the
Security and Offshore Account Agreement described
below

(iv) (●)% of proceeds of an IPO or other equity offering.

(v) Proceeds received in respect of compensation for

insurance (thresholds to be determined).

(vi) Pari passu among the Finance Parties with any

prepayment of a term Loan.

21. Interest Rate: For each of the IFC Loan, EIB Loan, AfDB Loan,
AFD/Proparco Loan, DBSA Loan and KfW Loan: Variable
rate of six month USD LIBOR plus the Applicable Margin,
payable in arrears on each Interest Payment Date.

22. Applicable Margin: [350] basis points per annum (bps p.a).

23. Default Rate: 200 bps p.a. above the applicable Interest Rate (including
the Applicable Margin) for each Loan.

Appraisal Fee: IFC Loan: USD 250,000

EIB Loan: __________
AfDB Loan: USD 70140,000
KfW Loan: USD 50,000
DBSA Loan: __________
AFD-Proparco Loan: __________

Payable before signing of the loan agreement

24. Commitment Fee: IFC Loan: 0.5% p.a on the undisbursed amount.
EIB Loan: 0.25% p.a on the undisbursed amount.
AfDB Loan: 0.5% p.a on the undisbursed amount.
KfW Loan: 0.5% p.a on the undisbursed amount.
DBSA Loan: [___]% p.a on the undisbursed amount.
AFD/Proparco Loan: 0.5% p.a on the undisbursed amount.

Accruing 60 days after the signing of the loan agreement and

payable at each payment date.

25. Front-end Fee: IFC Loan: 1.5% of the principal amount.

EIB Loan: 1%
AfDB Loan: 1%
KfW Loan: 1%
DBSA Loan: [___]%
AFD/Proparco Loan: 1%

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Company Legal Adviser Fees:
Payable before signing of the loan agreement.
EIB: USD 1,700,000
AFD/Proparco: USD 95,000 which represents part of the
initial project feasibility study
[……..]

Payable when ?

26. Additional Costs: Borrower to pay the following standard costs:

(i) Increased Costs due to change in law or regulations.

(ii) Unwinding Costs.

(iii) Tax gross-up and indemnity.

(iv) All taxes payable on any Finance Documents or on

any amounts thereunder.

(v) Invoiced and reasonable legal fees and expenses

relating to (a) the negotiation, preparation, execution
and implementation of the Finance Documents and
Material Agreements; (b) amendments or waivers in
respect of the Finance Documents; (c) release of the
Security after repayment of the Loans; and (d)
invoiced legal fees and expenses relating to the
protection of the Finance Parties’ interests and
enforcement of their rights and remedies under the
Finance Documents and Material Agreements.
[Provisional budget for the DFI legal fees estimated at
USD1,000,000 1,250,000]

(vi) Invoiced and reasonable costs and expenses of the

Finance Parties related to the costs, fees and expenses
of their external advisors (other than legal advisors),
including travel expenses, in connection with the
proposed transaction

27. Ranking: All debt provided by the Lenders pursuant to their

respective Loan Agreements (the “Senior Debt”) will rank
pari passu (in right of payment and rights under the
Security), and will rank senior to any other Financial
Indebtedness of the Borrower, provided that certain
Permitted Debt may be incurred on an unsecured and
unsubordinated basis up to a maximum amount specified1.

28. Equity: Borrower is required to be capitalized with up-front paid-in

equity in the amount of USD[___] million (the “Up-front
Equity Amount”). It is expected that each Shareholder
will contribute its share of the Up-front Equity Amount via
Shareholder equity subscriptions. These amounts are to be
paid-in prior to the first disbursement by the Lenders. .

29. Capacity Off take Contracts: Each Shareholder except DBSA, Telkom SA and Sudatel, to

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execute a Capacity Off take Contract, in a form approved by
the Finance Parties, agreeing to purchase from the Company
a specified minimum amount of capacity, at a specified
price as set out in Annex A. Such Capacity Off take
Contract to cover a period of three years.

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30. Pre-Purchase of Capacity: Shareholders will purchase an amount of capacity from the
Company up-front (the “Pre-Purchase of Capacity”), at a
specified price as set out in Annex A. The purchase of such
capacity would be made by way of up-front cash
contributions to the Company. These amounts are to be
paid-in prior to the first disbursement by the Lenders.

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31. Contingent Sponsor Support: If at any time during the three year period following the
date at which EASSy is ready for commercial service
(“RFCS” as defined in the Supply Agreement with Alcatel-
Lucent), the Company does not have the financial resources
to fund the amount of (i) its operating expenditure and, (ii)
fees and interest payments to DFIs and (iii) scheduled
principal payments as described in the Initial Business Plan,
the Shareholders except DBSA, Telkom SA and Sudatel,
hereby undertake to purchase from the Company such
capacity as will provide sufficient revenues to allow the
Company to fund such amounts provided that such purchase
shall be:

(a) pro rata to their pre-purchase commitments pursuant

to the Subscription Letters; and
(b) on the same terms and price as the relevant Pre-
Purchase Capacity Off-Take Contract.

Why exceptions for Telkom SA and Sudatel ?

32. Security: (i) Pledge on all shares in the Company held by the
Shareholders.

(ii) Security interest on all of the Company’s fixed and

moveable assets, tangible and intangible.

(iii) Security interest over the Company’s bank accounts

(including offshore accounts) and rights to
compensation following any revocation or termination
of applicable licenses.

(iv) Security assignment of insurance policies.

(v) Security assignments of all Material Agreements, (to

include, inter alia, the Construction and Maintenance
Agreement, the Capacity Off take Contracts and the
Landing Party Agreements. These security
assignments shall provide for assignments of the rights
of the Company and shall provide for the exercise of
relevant contractual rights by the Company (including
set-off, if any) prior to enforcement

(vii) [Other, TBD pursuant to legal due diligence].

33. Security and Offshore Account (i) All gross proceeds obtained by the Company from
Agreement export sales and local sales of the Company shall be
deposited in a dollar donominated Offshore Account
under the control of the Account Bank to be named
in London, England or New York, New York. The
balance of such account shall be invested in short
term marketable securities satisfactory to the
Lenders and the Company. The nomination of the
Account Bank will need the prior consent of the
Lenders.

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(ii) From each receipt of sales proceeds during each
fiscal semi-annual period, the Account Bank shall
retain in an Offshore Account under the control of
the Account Bank, an amount equal to 100% of such
payment until the total amount retained is equal to
the interest and principal together with fees and
charges due on the loans, at the end of the relevant
semi-annual period (such interest and principal and
other fees and charges due herein the “Debt Service
Amount”). Thereafter additional, provided that no
event of default has occurred, proceeds may be
released to the Company to allow it to pay for its
operating expenses, taxes and other non-
discretionary capital expenditures essential for the
Company’s business operations,. The Company will
provided a detailed forecast of such expenditures,
expenses and taxes at the beginning of each semi-
annual period and provide documentary evidence if
requested.

(iii) Note: The Offshore Account in para (ii) above shall

be funded with a minimum amount of US$3.4
million at the time of the first loan disbursement.

(Is this sufficient to cover interest and other fees ?)

(iv) The Lenders shall have a first ranking lien on the

above account.

(vi) In cases of default under the agreements for Senior

Loans, the full amount of the proceeds in the
Offshore Account shall at the option of the Lenders
be applied to entirely repay all amounts outstanding
by acceleration or otherwise

(v) Cash Allocation : Cash derived from operations in

each semester, except for amounts released to the
company under sub-paragraph (ii) above, would in
the absence of an event of default be applied in the
following order:

- interest payments and fees and charges on the

Senior Loans.
- principal repayments on the Senior Loans.
- Mandatory Prepayment of Senior Loan
Repayments: Up to 75% on a cumulative
basis of the balance remaining after the above
payments to be used to effect additional
repayments of the Senior Loans, provided that
the Company’s Debt Service Coverage Ratio
current ratio after the additional repayments
would not be less than (1.3 ).

Cash sweep mechanism :

- (For example. if [1.3] < 6 month DSCR < [2.0] excess

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 cash flows are 100 % used for bank debt repayment
- If [2.0] < 6 month DSCR and if less than 50 % of debts
have been repaid, excess cash flows are [70%] used for the
Bank debt repayment and [30%] for shareholder payments
within a limit of USD [1.5 million] above which 100 % of
the excess is paid to the Banks.
- If [2.0] < annual DSCR and if more than [50%] of the
debts have been repaid, excess cash flows are [50%] used
for the Bank debt repayment and [50%] for Shareholder
payments.

Where (Shareholder Payments) will include dividends and

management fees and payments or any mezannine lender.

The remainder of the balance not used to effect Mandatory

Prepayment of the Senior Loan repayments would be used:-

- to cover post-completion investments over and

above any preagreed investments;
- Dividends.

34. Development Policy Objectives: As development finance institutions, the Lenders require
that certain policy objectives be incorporated in the
structure of the financing, including (i) conditions for
competition and open access be ensured, by way of the
Company’s ability to sell its capacity, unfettered, in all of
the Specified Countries and any other countries (subject to
local regulations) and the ability for third parties to access
such capacity at fair rates, (ii) there to be no discriminated
in terms between what the Landing Party agrees for itself
and WIOCC customers, (iii) WIOCC’s prices to be set at a
level to provide a reasonable rate of return on capital
invested and (iv) WIOCC’s price list to be made public on
its website.

Lenders will require that these Development Policy

Objectives be enshrined in various Material Agreements
and Finance Documents as appropriate.

35. Accounts: Interest-bearing accounts are to be established and

maintained by the Company at the Account Bank, as
defined by the Lenders.

36. Constitutive Documents of WIOCC: Lenders to be satisfied with the by-laws and other corporate
enabling documents of WIOCC, with respect to: (a) their
impact on the commercial and financial operations of
WIOCC; and (b) the enshrining of the specific Development
Policy Objectives required by the Lenders.

37. Governance Arrangement/Nominee Lenders to be satisfied with the Company’s corporate

Director: governance arrangements, especially with respect to how
matters relating to the Development Policy Objectives are
protected. The Lenders will require the right to appoint a
nominee director to the company’s Board of Directors (all
fees and travel expenses/out-of-pocket costs to be paid by
the Company)

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38. Assignments and Transfers by A Lender may assign any of its rights or transfer any of its
Lenders: rights and/or obligations in respect of the Loans without
restriction to any party.

39. Finance Documents: To include, inter alia

(i) Common Terms Agreement among the Company,

the Lenders, the Intercreditor Agent, the Security
Trustee(s) and [other parties to be determined,
including other agents].

(ii) IFC Loan Agreement between the Company and

IFC in respect of the IFC Loan.

(iii) EIB Loan Agreement between the Company and

EIB in respect of the EIB Loan.

(iv) AfDB Loan Agreement between the Company and

AfDB in respect of the AfDB Loan.

(v) AFD/Proparco Loan Agreement between the

Company and AFD/Proparco in respect of the
AFD/Proparco Loan.

(vi) DBSA Loan Agreement between the Company and

DBSA in respect of the DBSA Loan.

(vii) KfW Loan Agreement between the Company and

KfW in respect of the KfW Loan.

(viii) Intercreditor Agreement among the Lenders, the

Agents and the Security Trustee(s).

(ix) Security and Offshore Accounts Agreement among

the Company, the Finance Parties and the Account
Bank.

(x) Share Retention Agreement among the

Shareholders, the Company and the Security
Trustee/Finance Parties, whereby the Shareholders
agree to retain ownership in the Borrower until the
Senior Debt is fully repaid.

(xi) Other (TBD following legal due diligence).

40. Material Agreements: To include, inter alia:

(i) Any relevant Licenses or Authorizations obtained by

the Company.

(ii) Shareholders’ Agreement and Subscription

Agreement among the Company and the
Shareholders.

(iii) By-Laws and/or Constitutive documents of the

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 Company.

(iv) The Supply Contract with Alcatel-Lucent.

(v) All other contractual arrangements with a value in

excess of [●] million per annum or which are
necessary, in any material respect, for the
implementation of the Company’s business and
operations.

(vi) Leases for the Company’s head office and other key
locations as relevant.

(vii) Capacity Off take Contracts.

(viii) Landing Party Agreements.

(ix) Onward Connectivity Agreements.

41. Conditions to signing of Finance (i) Evidence satisfactory to the Lenders that WIOCC
Documents: Capitalization2 will be 75%:25% or better.

(ii) Company Business Plan shall have been agreed by

the Lenders.

(iii) Evidence satisfactory to the Lenders that the total

financing required for the construction of the
EASSy Cable is available.

(iv) Satisfaction by the Lenders of the form and

substance of each Material Agreement, including the
C&MA and any associated operational principles
and/or regulations which are considered relevant to
the financing by the Lenders, the Constitutive
Documents of WIOCC, and the form and amount of
Capacity Off take Contracts, up-front Equity, and
pre-purchase of capacity commitments entered into
by Shareholders.

(v) Lenders’ satisfaction with the status of all

environmental and social impact assessments and
associated documentation

(v) Satisfaction by Lenders with Company Insurance

program

(vi) [Other].

42. Conditions Precedent for (a) First Disbursement

Disbursement of the Loans:
(i) International reputable firm of public accountants
acceptable to the Lenders shall have been appointed

2
Capitalization defined as Debt to Contributed Capital; where Contributed Capital equals Equity plus Pre-Purchases of Capacity plus
any third party equity contributions from Financial Investors.

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 as auditors to the Company.

(ii) Evidence satisfactory to the Lenders of the

contribution of the Equity and amounts related to the
Pre-Purchases of Capacity.

(iii) Insurance report from a reputable insurance

specialist confirming the adequacy of the
Company’s insurance policies, and a certificate from
the Company’s insurers confirming that such
policies are in full force and effect and all premiums
then due and payable under those policies have been
paid and that such policies contain an endorsement
naming the Security Trustee as loss payee in respect
of claims exceeding USD[●] million (or equivalent)
under all insurance policies, and naming the Finance
Parties as additional insureds on all liability policies
shall have been received.

(iv) A certificate of the auditors stating that acceptable

accounting, management information and cost
control systems are in place.

(v) Finance Documents and Material Agreements shall

have been executed by the parties and have become
effective and unconditional.

(vi) Security shall have been duly created and

arrangements satisfactory to the Lenders have been
made for the perfection and registration thereof. (?)

(vii) Funding of the EASSY Cable project cost set forth

in Annex C is satisfactory to the Lenders.

(viii) The required Accounts shall have been established.

and provisioned with the required amount.

(ix) Certified copies of the Constitutional Documents of

the Company shall have been delivered.

(x) Usual corporate authorities of the Company and

other parties to the Finance Documents (other than
the Finance Parties) shall have been delivered.

(xi) Legal opinions in agreed forms shall have been

obtained from the international and local counsel to
the Lenders and the local counsel to the Company.

(xii) All fees and expenses required to be paid prior to

first disbursement shall have either been paid or
arrangements satisfactory to the Lenders have been
made for the payment thereof from the proceeds of
the first disbursement of the Loans.

(xiii) Agents for service of process shall have been

appointed.

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(xiv) All other conditions precedent under each
individual Loan Agreement for the first
disbursement shall have been satisfied and this has
been confirmed by the relevant Agents to the
Intercreditor Agent.

(xv) All permits, license and authorizations required for

WIOCC to sell its capacity in the following
countries have been obtained (South Africa,
Kenya, Tanzania, Uganda)

(xvi) Appointment of WIOCC’s CEO and

Marketing/Sales Director and terms of their
employment contracts including remuneration and
incentives satisfactory to the Lenders.

(xv) The Lenders are satisfied with the Committee

arrangements relating to the management of the
EASSY Consortium.

(xvi) All the conditions for the Coming Into Force of the
Supply Contract have been met (except that related
to the loan financing of WIOCC)

(xvii) Evidence satisfactory to the Lenders that the

Landing Points arrangements (TO BE DEFINED)
are in place.

(xviii) Lenders’ satisfaction with the status and progress

of the regulatory environment in each of the
Specified Countries (including open access to
landing stations and appropriate build-out of
backhaul/backloop), as relates to their
Development Policy Objectives

(xix) Lenders’ satisfaction with the EASSy cable

connectivity with landing stations and onward
connectivity to international cable systems, as
appropriate

(b) All Disbursements

(i) No Event of Default.

(ii) Representations and warranties are true and correct.

(iii) No Material Adverse Effect.

(iv) No Lender shall have suspended or cancelled its

commitment under any Loan Agreement.

(v) All other conditions precedent under the relevant

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 individual Loan Agreements shall have been
satisfied or waived.

(vi) Other (TBD).

43. Covenants: Customary for a transaction of this nature.

44. Financial Covenants: Customary for a transaction of this nature.

45. Financial Reporting: Customary for a transaction of this nature.

46. Restrictions on Distributions: Payment of dividends (whether in cash, in kind, by set-off

or otherwise) or other distributions and payments by the
Company to the Shareholders will be prohibited until the
First Repayment Date and thereafter payable only as set out
in the Security and Offshore Account Agreement and
subject to financial ratio covenants.
(Which ratios to be determined)

47. Representations and Warranties: Customary for a transaction of this nature.

48. Events of Default: Customary for a transaction of this nature.

49. Governing Law and Jurisdiction: The Finance Documents will be governed by the laws of
England, and the Company will submit to the jurisdiction of
the courts of England

50. Other Provisions: Other standard provisions of international loan and/or DFI
documentation to be included, including provisions related
to illegality, currency indemnity, Agents’ and Security
Trustee’s indemnities and other usual indemnities,
confidentiality, market disruption, money laundering and
anti-corruption, suspension and cancellation of
commitments and agency provisions to be agreed by the
parties as part of the documentation process.

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 ANNEX A: WIOCC SHAREHOLDERS

Shareholders Subscribed Pre-Purchase of Capacity Offtake

Equity (US$ mill.) Equity Share % Contract
Commitments
Djibouti Telecom 1.0 1.0
Sudan Telecom 1.5
Dalkom Somalia 1.0 1.0
Telkom Kenya 1.0 0.55
Onatel Burundi 0.55 0.55
Zanzibar Telecom 1.0 1.3
Canartel 1.0 1.5
UTL 1.0 1.5
Telecel Burundi 0.8 0.8
Telkom SA 1.5
SATCOM Network Africa
BTC 0.55 0.55
STC 0.55 0.55
TDMoçambique 1.0. 1.0
Sub Total 12.45 10.25
DBSA 3.0 -
Sub total Equity 25.7

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 ANNEX B: SOURCES AND USES OF FUNDS

Project Cost US$ Financial Plan US$

Mill. Mill.
Investment in EASSy Cable Consortium 92.5 Equity 30.5
Interests during construction Operators (see table below) 27.5
Financing Fees/Costs DBSA 3.0
Working Capital Debt 75.0
Management and Advisors’ costs IFC 17.0
Contingency EIB 14.0
ABDB 14.0
KFW 11.0
DBSA 10.0
AFD-Proparco 9.0
TOTAL WIOCC Project cost 105.5 105.5

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 ANNEX C: EASSY CABLE CONSTRUCTION COST

Project Costs US$ Mill.

Turnkey Supply Contract
Project management
Submersible Plant
Marine Activities
Terminal Stations
Sub-total Turnkey Supply Contract 195.9

Test equipment and other equipment 4.5

Rights of way/crossing Agreements 1.0
Re-routing around Somalia 4.5
Additional Repeater in case of Somalia Branch 1.9
failure
War Risk Premium for Somalia -

Inspection/Supervision services 2.5

Training Expenses 2.0
Preparation Expenses 4.55
Customs Duties/VAT 6.0
Contingency 12.15
Sub-Total Other expenses 39.10

Total EASSy project cost 235.0

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ANNEX D: REPAYMENT SCHEDULE

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ANNEX E: LIST OF INSURANCE POLICIES

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