Telstra to invest in Southern Cross Cable Network, acquire capacity on Southern Cross NEXT Cable

The Southern Cross Cable Network (SCCN) and its shareholders, Spark New Zealand, Singtel and Verizon Business, have announced that Telstra has entered into agreed terms to purchase a 25% stake in the SCCN as well as substantial capacity on both the existing network and the new Southern Cross NEXT subsea cable.

The share purchase and capacity purchase are interconditional, and both are subject to definitive documentation and relevant regulatory approvals. SCCN owns and operates the trans-Pacific Southern Cross Cable and has initiated work on the Southern Cross NEXT cable.

With work already completed including presales, marine survey, landing arrangements, Pacific Island agreements, detail design and the cable request for tender (RFT), the Southern Cross NEXT project is well positioned to meet its target completion date of end-2020.

Southern Cross NEXT will be a high capacity express route, providing data centre connectivity between Sydney, Auckland, and Los Angeles in the US. It is scheduled for completion by end-2020. Given its design and route, it will be the lowest latency path from Australia and New Zealand to the US.

The new 12,250 km cable system has been developed as an extension of the existing Southern Cross ecosystem. It will allow customers to leverage Southern Cross’ point-of-presence network and access infrastructure already in place. It will also flexibly assign new and existing capacity across the three routes from Australia to the US, Australia to New Zealand and New Zealand to the US, maximising diversity and resiliency.

Southern Cross NEXT is expected to cost around US$300 million, and is designed to carry 72 terabits of traffic, the equivalent of simultaneously streaming millions of movies a second. Services offered on the new system will be an extension and integration of the services offered across the current Southern Cross platform.

The construction will be funded by a combination of capacity payments, equity contributions and financing.

Southern Cross Cables President and CEO Anthony Briscoe said: “Southern Cross has always been a provider of high-quality customer focused and resilient international capacity solutions, and 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 to the US via Los Angeles. We are delighted that Telstra has committed to the cable as an anchor customer, and more so that Telstra sees the value in our capability long-term and is set to take a stake in the company.”

Telstra Group Executive for Enterprise Michael Ebeid said: “Telstra has long been a key customer of Southern Cross and this investment will mean Telstra has an immediate ownership interest in the existing Southern Cross network, as well as in Southern Cross NEXT. This route is extremely important to our business as US to Australia traffic accounts for more than 80% of all the Internet traffic to Australia. Southern Cross builds on Telstra’s existing footprint in Asia Pacific and creates a critical new path for ‘Australia In’ and ‘Australia Out’ connectivity.”

Singtel VP, Carrier Services, Group Enterprise Ooi Seng Keat said: “The Southern Cross NEXT cable will be a new data superhighway expanding the existing Southern Cross network, enhancing network redundancy and providing the lowest latency route from Australia to the US. The new cable system enables Singtel Group and our Australian subsidiary Optus to meet customers’ growing high performance data requirements for bandwidth-intensive applications such as unified communications, enterprise data exchange, Internet TV and online gaming. With Singtel’s recent investment in the INDIGO cable system, the enhanced Southern Cross ecosystem will provide a new route from Southeast Asia to the US.”

GM of Regulatory Affairs for Spark John Wesley-Smith said: “This agreement is a major milestone in building what will be a valuable addition to the Southern Cross network, which provides critical connectivity between New Zealand, Australia, the Pacific Islands and the US. Southern Cross NEXT will ensure that Southern Cross can continue to provide high quality resilient connectivity to New Zealand, and serve our customers increasing demand for international capacity, for decades to come.”