Hawaiki Cable vows to keep trying after New York talks break down
Hawaiki Cable has suffered another disappointment in its bid to build a new $500 million communications cable to New Zealand.
But chief executive Remi Galasso says he won't throw in the towel.
Hawaiki Cable was holding talks with New York private equity firm Stonepeak International Partners which could have provided the remaining $150m it needed for its trans-Pacific cable.
However, the negotiations have not resulted in an agreement. Stuff learned about the confidential discussions after being accidentally copied in on an email between the parties in November.
READ MORE: Cable guy is ready to roll
Galasso was optimistic the Hawaiki cable could still get the green light in March, with funding from New Zealand investors.
Hawaiki had signed up a new "tier one" United States telecommunications company as a customer in January, meaning it would require less equity funding than previously envisaged, he said.
Other customers which have agreed to pre-buy capacity on the cable include Vodafone and Crown-owned research network operator Reannz.
Hawaiki's proposed 13,127 kilometre cable would link New Zealand and Australia to the United States, via Hawaii, also connecting several other Pacific islands.
Proponents believe it could mean faster and cheaper access to overseas websites and online services for broadband users.
Galasso expected it would also encourage US internet businesses to set up data centres in New Zealand, giving a shot in the arm to the technology industry.
A new trans-pacific cable would "tick a box" for the Government which has been concerned outages on the Southern Cross' cable network could cut New Zealand off from cyberspace.
Stonepeak manages investments worth US$1.7 billion, mostly in power, pipeline, desalination and transport infrastructure in North America. The company describes itself as having a "conservative yet opportunistic approach to infrastructure investing".
Its managing director Brian McMullen would not immediately comment on why it had been unable to conclude an agreement with Hawaiki.
Bluesky, a Spanish-owned company based in American Samoa, announced in December that that it also intended to build a cable between Hawaii and New Zealand, linking several Pacific islands.
An industry source said Hawaiki had signed an agreement with Bluesky's rival, the American Samoa Telecommunications Authority, to lay a spur on its cable to connect American Samoa, which threatened Bluesky's commercial interests.
Bluesky's surprise announcement might have been designed to derail Hawaiki's funding negotiations at a time when it appeared Hawaiki might be very close to the finishing line, the source said. Bluesky spokeswoman Nicole Crump denied that.
Family-owned Todd Corporation was considering bankrolling Hawaiki's cable in 2013, according to the chief executive of a major listed company. However, it is understood to have wanted the vast majority of the funding to come from pre-sales of capacity to telecommunications companies and from loans.
Talks with another potential investor, the New Zealand Superannuation Fund, are believed to have broken down last year, prompting Galasso to turn in June to French bank Natixis to help find an overseas investor.
Galasso said the Ministry of Foreign Affairs and Trade would this week meet in Auckland with delegations from Tokalau, Niue, the Cook Islands and Tahiti, and that Hawaiki would propose a solution to connect them with its planned cable.
"It is my Everest but I don't give up," he said.
The Southern Cross cable is the only fibre-optic cable network directly linking New Zealand and the US and is expected to remain in service until at least 2030.
Its shareholders, Spark, Singtel Optus and Verizon, are attempting to kick off talks with customers on how it could be superseded.
Spark, Vodafone and Telstra plan to lay an additional fibre-optic cable across the Tasman this year, between Raglan and Sydney.