Southern Cross Cable: in demand and in the black

Stuart Corner
Thursday, 03 November 2005 17:33

Business IT - Networking

Southern Cross Cable says that demand for capacity on its links to North America is surging, and thanks to a swag of new sales it has paid of the last of the $US950 million debt run up to build the system.

CEO and president, Fiona Beck, said: "The recent sales reflect strong broadband growth and have enabled us to repay the bank debt which financed the project from when construction began in 1998. Our bank debt peaked at US$950 million but by 28 October 2005 this was repaid in full."

The network, built at a cost of $US1.3 billion, came into service in November 2000. It connects Australia, New Zealand, Fiji and Hawaii to the US mainland over two diverse submarine fibre-optic cables that form a fully protected ring. The company is jointly owned by Telecom NZ (50 percent), SingTel-Optus (40 percent) and MCI (10 percent).

Sales and marketing director, Ross Pfeffer, said: "there has been a tremendous upsurge in the use of Southern Cross capacity over the last two years. This is in response to very high broadband growth in our primary markets of Australia and New Zealand where more than one million new subscribers are now being connected annually.

"We introduced substantially lower prices for our network capacity earlier this year...Our new prices successfully encouraged telecommunications companies to make large capacity purchases and the great majority of this capacity will be deployed to support broadband."

Southern Cross completed a major capacity expansion in January 2003, taking total equipped and protected capability to 240Gbps. However, according to Pfeffer, "during the last two years the utilisation of the network has more than doubled and 32 percent of the recently equipped network capacity on the Australasia-US ring is already in use. An additional 10 percent of sold capacity is expected to be activated by customers shortly, taking network utilisation to over 40 percent."

The company said it had made sales of new capacity in the six months to 31 October totalling $US218 million. "Our customers have again preferred to purchase indefeasible rights to use Southern Cross capacity until 2020 rather than to lease capacity for much shorter periods. This reflects long term confidence in the Southern Cross company and its network" Pfeffer said.