Tuesday, 18 December 2018 17:51

Telstra taking up equity investment in Southern Cross Cable Featured

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Telstra taking up equity investment in Southern Cross Cable Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Telstra is taking up an equity partnership in Southern Cross Cable Networks with an investment that gives it extra capacity in the trans-Pacific subsea cable.

Telstra joins existing shareholders in the cable company — Spark New Zealand, Singtel and Verizon Business — inking a terms of purchase agreement to acquire a 25% stake in SCCN and substantial capacity on both the existing network and the new Southern Cross NEXT subsea cable.  

SCCN — which owns and operates the trans-Pacific Southern Cross Cable and has initiated work on the Southern Cross NEXT cable — says the share purchase and capacity purchase are inter-conditional, and both are subject to definitive documentation and relevant regulatory approvals.

Southern Cross NEXT will be a high capacity express route, providing data-centre connectivity between Sydney, Auckland, and Los Angeles and is scheduled for completion by end-2020, and given its design and route, will be the lowest latency path from Australia and New Zealand to the United States.

The new 12,250 kilometre cable system has been developed as an extension of the existing Southern Cross eco-system.

SCCN says the cable will allow customers to leverage its extensive point-of-presence network and access infrastructure already in place, and will also flexibly assign new and existing capacity across the three routes from Australia to the US, Australia to New Zealand and New Zealand to the US, maximising diversity and resiliency.  

Southern Cross NEXT is expected to cost around US$300 million, and is designed to carry 72 terabits of traffic, the equivalent of simultaneously streaming millions of movies a second, which SCCN says ensures it can cater for its customers’ growing data requirements well into the future.

Services offered on the new system will be an extension and integration of the services offered across the current Southern Cross platform. The construction will be funded by a combination of capacity payments, equity contributions and financing.

Southern Cross Cables president and chief executive Anthony Briscoe said: “Southern Cross has always been a provider of high-quality customer focused and resilient international capacity solutions, and the addition of the new Southern Cross NEXT route to the existing platform will provide existing and future customers with further resiliency and connectivity options between Australia/New Zealand and to the US via Los Angeles. We are delighted that Telstra has committed to the cable as an anchor customer, and more so that Telstra sees the value in our capability long-term and is set to take a stake in the company.”

“Telstra has long been a key customer of Southern Cross and this investment will mean Telstra has an immediate ownership interest in the existing Southern Cross network, as well as in Southern Cross NEXT,” said Telstra group executive for enterprise, Michael Ebeid.

“This route is extremely important to our business as US to Australia traffic accounts for more than 80% of all the internet traffic to Australia. Southern Cross builds on Telstra’s existing footprint in Asia Pacific and creates a critical new path for ‘Australia In’ and ‘Australia Out’ connectivity.”

Singtel vice-president, Carrier Services, Group Enterprise, Ooi Seng Keat, said: “The Southern Cross NEXT cable will be a new data superhighway expanding the existing Southern Cross network, enhancing network redundancy and providing the lowest latency route from Australia to the US. The new cable system enables Singtel Group and our Australian subsidiary Optus to meet customers’ growing high performance data requirements for bandwidth-intensive applications such as unified communications, enterprise data exchange, internet TV and online gaming.”

“This agreement is a major milestone in building what will be a valuable addition to the Southern Cross network, which provides critical connectivity between New Zealand, Australia, the Pacific Islands and the USA,” said general manager of regulatory affairs for Spark, John Wesley-Smith.

“Southern Cross NEXT will ensure that Southern Cross can continue to provide high quality resilient connectivity to New Zealand, and serve our customers increasing demand for international capacity, for decades to come.  We welcome Telstra as a prospective shareholder alongside us in Southern Cross.”

SCCN  says that with significant work already completed including pre-sales, marine survey, landing arrangements, Pacific Island agreements, detail design and the cable RFT, the NEXT project is well positioned to meet its target completion date of end 2020.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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