Pacific Fibre confirms $91m customer deal

Pacific Fibre is planning to build a new undersea cable connecting New Zealand with the rest of the world. Image / Thinkstock

The company planning to build New Zealand's second international internet link has confirmed its $91 million contract with the Crown-owned research network, REANNZ.

Cable builders Pacific Fibre first announced it was partnering with REANNZ in May but today released details on what the deal is worth.

REANNZ - Research and Education Advanced Network New Zealand - owns and operates the high-speed, unrestricted broadband network connecting universities and research institutes.

The agreement will see the internet speeds available to its members rise from today's 1 gigabit per second to an initial 40 gigabits and then to 160 gigabits per second over time.

It was approved by the REANNZ board and by shareholding ministers Bill English and Wayne Mapp.

The deal puts Pacific Fibre a good step closer to acquiring the US$400 million it needs to lay a cable between Auckland, Sydney and Los Angeles.

The funding from REANNZ will form part of the debt component of the cable, which is 40 to 45 per cent of the build (US$160m-US$180m).

The remaining funding, being led by Credit Suisse and First NZ Capital, will come from investors.

Pacific Fibre argues the cable system is needed to bring competition to the international capacity market, allowing New Zealand to take full advantage of the Government's ultra-fast broadband scheme.

The trans-Pacific cable system is due to be operational by the end of 2013.

The company's chief executive, Mark Rushworth, said more customer agreements would be announced in the coming weeks.