Telstra, Spark team up on $440m Pacific cable
Plans for a new US$300 million (NZ$440m) internet cable linking New Zealand, Australia and the United States appear to have taken a huge leap forward with Australia’s Telstra agreeing to take a 25 per cent stake in the Southern Cross Cable Network.
Southern Cross built the first fibre-optic cable network linking the three countries in 2001 and is currently half-owned by Spark, with Singaporean telco Singtel and US firm Verizon owning the remainder of the business.
Its existing cable network is expected to remain in service until 2030 but it has been planning a new cable on the route, called Next.
Southern Cross’ ability to shore up support for Next was called into question after Auckland rival Hawaiki Cable succeeded against most commentators’ expectations in raising funds for a competing $445m trans-Pacific cable which went into service in July.
But Telstra’s support appears to guarantee Next will go ahead.
Spark said in a statement that Telstra’s agreement to come on board as a shareholder in Southern Cross and to take capacity on the Next cable was ‘‘an important milestone’’ for the Next project.
The funding arrangements were yet to be finalised but Telstra had agreed to become one of the anchor customers on the new cable as well as a new shareholder in Southern Cross, the statement said.
‘‘If confirmed, Telstra is expected to become a 25 per cent shareholder in Southern Cross by investing in new shares, resulting in Spark New Zealand’s shareholding being diluted to approximately 37.5 per cent.’’
Next was due to be in service by the end of 2020 and would provide the ‘‘lowest lag’’ for internet traffic between New Zealand and the US – and between Australia and the US.
Chief executive Anthony Briscoe said the cable would provide ‘‘further resiliency and connectivity options’’.
Hawaiki’s cable won an award as ‘‘best subsea project of the year’’ at the Global Carrier Awards in London in October.
Only a proportion of the capacity on both cables will be available on their New Zealand routes, however, with both cables having one pair of fibre strands running from the US to New Zealand, and two pairs to Australia.