Cable deal for Pacific Fibre

A new international fibre-optic cable linking New Zealand with America and Australia is a step closer today after Kiwi company Pacific Fibre announced a partnership deal with Asian telco Pacnet.

The deal means the two companies will share the cost of building and operating the proposed 13,600km cable, which aims to boost capacity and reduce the price of international communications.

Pacific Fibre CEO Mark Rushworth, in Sydney for the announcement, said the agreement was ''great news.''

''It's great to have Pacnet join us as equal partners,'' he said.

''This even further validates the need for a new cable to Australia and New Zealand, and will ensure the success of the Pacific Fibre system. Pacnet has done this before as the largest investor within Unity cable group, and we are already benefiting from working with them.''

Pacific Fibre, a new venture backed by business heavyweights including Sam Morgan, Stephen Tindall and Rod Drury, estimates the total cost of building the cable at US$400 million ($547 million).

With Pacnet on board, that cost will be split according to how the fibre is configured, said Mr Rushworth.
 
''Under a scenario where we take a fibre pair each, we split the cost, so it reduces the hurdle rate to build a business case,'' he said. ''If it's one [fibre pair] each it's US$200 million each.''

He said the project was on track to seek bids from contractors in September or October and select a supplier in the first quarter of next year. The new cable could be in operation in 2013.

Although the project needs committed customers before it can go ahead, Mr Rushworth said the Pacnet deal would help secure the signatures it needs.

''Each day we get a greater degree of confidence the more customers we talk to. This is a step in the right direction, it builds momentum. Customers will look at it and go 'crikey some  things are really happening there with Pacific Fibre, it is going to happen, I need to be on board, I need to be part of it'. We expect that momentum to move customers sitting on the edge into a position to commit to us.''

He said announcements were expected from customers ''in due course''.

Pacnet CEO Bill Barney said the new cable would be an integral part of its infrastructure.

''As Australia and New Zealand look towards deploying national broadband networks that will raise broadband penetration and access speeds, this new cable that we are building with Pacific Fibre will deliver the enhanced international connectivity that is essential to support these broadband initiatives.''

Pacnet, based in Hong Kong and Singapore, owns Asian subsea network EAC-C2C, which links Japan, Korea, Hong Kong, Taiwan, Philippines, Singapore and China.

It is one of six companies in a consortium building the 9,620km Unity cable connecting Japan and the United States.

The others are Google, Bharti Airtel, Global Transit, KDDI, and SingTel.

Unity was completed in April at a cost of US$300 million.

- © Fairfax NZ News