Chairman Sam Morgan said: "We've spent millions of shareholder funds trying to get this done and despite getting some good investor support we have not been able to find the level of investment required in New Zealand initially and more broadly offshore.

"The global investment market is undoubtedly difficult at the moment but we knew this was always going to be hard, regardless of our timing."

Cofounder Rob Drury added: "We started Pacific Fibre because we know how important it is to connect New Zealanders to global markets. The high cost of broadband in New Zealand makes it hard to connect globally and it is this market failure, not a technical failure, that we tried hard to solve.

"We still cannot see how the government's investment in UFB makes sense until the price of international bandwidth is greatly reduced."

In September 2011, Australian telecommunication research company Market Clarity reported the cost of bandwidth to the U.S. from New Zealand as 5.8 times greater than the price paid by Australians.

Morgan added: "This project had encouraging early momentum and we were pleased to attract a great team and board, and shareholders who invested because they felt passionately that this problem needs solving for New Zealand. We believed funding for these long term infrastructure investments would have been more readily available and were confident the business case was solid.

"We feel like we've done everything we can to succeed and we are all hugely disappointed that we have not managed to get there."

Pacific Fibre launched in March 2010, proposing to build a system with two fibre pairs with 64 wavelengths each operating at 40Gbps to give a maximum capacity of 5.12Tbps if all wavelengths were lit.

The project got a significant boost in July 2010 when regional cable operator Pacnet joined in saying it would take exclusive use of one pair. However it pulled out a few months later.

Pacific Fibre called tenders for the construction and laying of the system in early 2011 and named ANZ Bank, Credit Suisse and First NZ Capital to lead fund raising. In July 2011 it announced that it had signed a long term binding capacity sale agreement with REANNZ - operator of the New Zealand research and education network - for $NZ91m.

Shortly afterwards TE Subcom was named as the company chosen to build the system.

By April 2012 it had signed up Vodafone NZ, iiNet and a couple of un-named customers taking total capacity sales to over $US200m And last week iiNet signed a new contract with the incumbent, Southern Cross Cable, boosting its capacity on that system from 20Gbps to 200Gbps.

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