$550m data cable plan leaps ahead

Pacific Fibre CEO Mark Rushworth said that the deal left the door open for other partners to come on board. Photo / Richard Robinson

Pacific Fibre is a step closer to turning its international data cable ambitions into reality with the sign-up of Asian telco Pacnet as an equal partner.

Pacific Fibre chief executive Mark Rushworth said the two companies would sign a joint agreement that will see them split the cost of building the cable and operation and maintenance costs.

Signing up customers, selling capacity and financing the project would be up to each individual partner, said Rushworth.

Backed by the likes of Sam Morgan, Sir Stephen Tindall, Rod Drury, David Kirk and Gareth Morgan, the 13,000km Pacific Fibre project aims to provide an international data link between New Zealand, Australia and the United States with five times the capacity of the current Telecom-backed connection.

Project costs are now estimated to be US$400 million ($550 million), down from the US$650 million originally quoted.

Pacific Fibre and Pacnet plan to run out two fibre pairs - one pair for each company - with a capacity of up to 5.12 terabits per second between Auckland, Sydney and Los Angeles by 2013.

The deal left the door open for other partners to come on board, Rushworth said.

He likened it to telecommunications companies taking advantage of council plans to dig up footpaths as an opportunity to lay fibre cables and share costs.

"You are starting to see that more and more in the sub-sea cable world as well," Rushworth said.

Pacnet has previously co-invested with Google and telcos such as Bharti Airtel and SingTel to build a US$300 million cable connecting Asia and the US.

"Once you've decided to build two fibre pairs, building a third, fourth or fifth if you want to is not very hard to do," said Pacnet chief executive Bill Barney.

"We'll be capable of doing it just the two of us - if we get additional partners, we get additional partners."

Technical complexities mean the consortium would prefer any potential partners commit to the whole 13,000km project rather than picking off specific legs.

This rules out possible transtasman cable player Kordia taking a fibre pair just for the Tasman crossing, with a preference for those companies to partner as capacity buyers, said Rushworth.

Barney said the business case was helped by Pacnet being a cable customer right from day one.

Pacnet, with a A$150 million ($184 million) Australian business, was last year linked to a bid for Telecom's struggling Australian arm AAPT.

Rushworth said a request for proposals would go out to vendors within a couple of months with a vendor selected in the first quarter of next year.

He said the next six to 12 months would be focused on signing customers, securing financing and gaining the necessary approvals to land the cable in the United States

"Once you've started [building] it's not a hard thing," said Barney. "It's getting the design right."

The original proposal included spurs off to Tonga and Samoa that Rushworth said were still technically possible but would only be built with funding from those Governments.