Tuesday, 01 October 2019 14:17

Telstra inks ‘conditional agreement’ for equity stake in Southern Cross Cable Network Featured

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Australia's largest telco Telstra has put pen to paper with the signing of a conditional agreement to take up a 25% equity interest in the US$300 million trans-Pacific Southern Cross Cable Network (SCCN).

Telstra’s signing of the conditional agreement follows its announcement in December last year of its inking of a terms of purchase agreement and intention to take up a 25% equity stake, joining existing shareholders - Spark New Zealand, Singtel and Verizon Business - in the cable company.

Telstra Enterprise Group Executive, Michael Ebeid, said Telstra’s investment in the NEXT cable will deliver benefits to all its customers – from enterprise to wholesale and consumer.

“With 80 per cent of all the internet traffic to Australia coming from the US, a high speed, low latency direct route to North America is a very important investment for our business and our customers,” Ebeid said.

"Southern Cross builds on our existing footprint across Asia Pacific where we carry 30 per cent of the region’s active capacity. We are now even better placed to meet our customers' future data requirements right across Asia Pacific.”

SCCN announced on Tuesday that conditional agreements have been executed and regulatory approvals have been obtained to enable construction of the subsea cable to soon begin.

“The shareholders have agreed to commit the necessary equity funding to enable Southern Cross NEXT to proceed with additional funding raised from debt and SCCN cash reserves,” the SCCN statement said.

“Although the transaction is still subject to some conditions, these are procedural in nature and are expected to be satisfied within the next few days.”

Alcatel Submarine Networks (ASN) has also been granted CIF to build the new high capacity express route which, once complete, will be the lowest latency path from Australia and New Zealand to the United States, based on its design and route. Southern Cross NEXT will provide data connectivity between Sydney, Auckland, and Los Angeles and is scheduled for completion by January 2022.

The new route will also provide critical international cable connectivity to the Pacific Islands of Fiji, Tokelau and Kiribati.

The new 13,483 kilometre cable system has been developed as an extension of the existing Southern Cross two cable eco-system, and will allow customers to leverage Southern Cross’ extensive point-of-presence network and access infrastructure already in place.

It will also allow Southern Cross NEXT customers to flexibly assign new and existing capacity across the three routes across the Pacific, connecting Australia, New Zealand, Fiji and the United States, maximising diversity and resiliency.

Southern Cross President and CEO Laurie Miller said: “The achievement of CIF is the result of a massive amount of effort by Southern Cross and the Sponsor teams over many months on the project.

“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 the United States,” Miller said.

“We are delighted to have successfully achieved this key milestone, and all focus will now turn to the timely implementation of the new system, and the continued development of product enhancements to meet our customers growing and changing requirements.”

“With significant work already completed including pre-sales, marine survey, landing arrangements, Pacific Island agreements, detail design and the cable RFT, the Southern Cross NEXT project is well positioned to meet its target completion date of January 2022.”

Spark Chief Financial Officer David Chalmers welcomed Telstra as a shareholder in Southern Cross: “The Southern Cross network provides critical connectivity between New Zealand and Australia, the Pacific Islands, and the USA. Southern Cross NEXT will ensure this network Cross can continue to provide that connectivity for the region, and meet our customers’ increasing data demands, for decades to come.”

And Singtel Vice President, Carrier Services, Group Enterprise Mr Ooi Seng Keat said: “Our investment in the Southern Cross NEXT cable is a timely reinforcement of our global network infrastructure.

“Together with the newly completed INDIGO submarine cable system, the enhanced Southern Cross cable ecosystem will be a new data superhighway connecting Southeast Asia to the United States, providing greater network diversity. The new cable system will enable Singtel and Optus to accelerate the roll-out of next-generation technologies that rely on low latency and high-bandwidth connectivity, reinforcing our position as one of the leading providers of international data services in the region.”

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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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