Fibre firm: we can raise cable cash

Pacific Fibre chief executive Mark Rushworth. Photo / Greg Bowker

A company hoping to build New Zealand's second international internet link has rubbished media speculation it won't be able to finance the project and says it "can see the finish line" of its funding efforts.

Pacific Fibre is planning to build a 12,950km fibre cable between Auckland, Sydney and Los Angeles at an estimated cost of US$400 million ($486 million).

Despite previously saying it hoped to have its finances sorted by November last year, Pacific Fibre has still not secured all the funds it needs.

In an article published yesterday by the Australian Financial Review, it was suggested the cable project was running behind schedule and the company "may not be able to find the equity it needs to build the pipe".

But Pacific Fibre chief executive Mark Rushworth denied the speculation, which came from unnamed industry sources.

"The project's running behind ... it's a lot harder than we thought [to gather funding] but we're absolutely confident that there's the capital out there to complete the cable," he said.

"We're are confident on the basis that there's strong demand. The market for [internet] bandwidth is doubling every two years," he said.

Although it was behind schedule, Rushworth said Pacific Fibre could "see the finish line at the end" of its funding drive.

"We can see the finish line and we're all in and driving towards that. The AFR was suggesting we're packing up the tent and going home. Absolutely not," Rushworth said.

Rushworth said the company was still planning to complete the cable by early 2014 and to do this would need to have funding secured in the "next couple of months".

Although construction has not yet begun, Pacific Fibre has already secured some big anchor customers, including Vodafone who signed a 10-year contract with the company worth more than $100 million.

Rushworth said yesterday these pre-sale contracts (which should be considered revenue for the company) amounted to US$170 million.

"That's a fair chunk of sales to do in 12 months and we've got other companies in the pipeline," he said.

Pacific Fibre hopes to rival the Southern Cross Cable Networks' pipe, which is the only link transporting internet traffic in and out of New Zealand. The second cable would bring competition to the market and bring the price of international internet capacity down, Pacific Fibre argues.

This would allow internet companies to increase the monthly data caps they offer, so users can take advantage of the faster speeds of the Government's $1.35 billion ultra-fast broadband network.

The UFB scheme aims to provide download speeds of 100 megabits per second to 75 per cent of New Zealand by the end of 2019. "There's a need for this in Australasia and in particular a need for this for New Zealand in order to ensure UFB [ultra-fast broadband] isn't a white elephant," Rushworth said.