Telstra boosts subsea cable portfolio with 25 per cent stake in Southern Cross

As part of agreement will purchase “substantial capacity” on existing cable as well as Southern Cross NEXT

Telstra will purchase a 25 per cent stake in Southern Cross Cable Network (SCCN), joining existing shareholders Spark New Zealand, Optus’ parent company Singtel and Verizon Business.

As part of the agreement, announced today, the telco will purchase “substantial capacity” on the existing Southern Cross cable network, which link Australia to the west coast of the United States, as well as Southern Cross NEXT.

The 12,250-kilometre Southern Cross NEXT will land at Sydney, Auckland, and Los Angeles. The US$300 million cable is expected to be completed by the end of 2020 and offer 72 terabits of capacity. Southern Cross said today the project is “well positioned” to meet its target completion date.

“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,” Telstra’s group executive for enterprise, Michael Ebeid, said in a statement.

Ebeid, the former head of SBS, joined Telstra in October.

“This route is extremely important to our business as US to Australia traffic accounts for more than 80 per cent 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,” Ebeid said.

A statement from Southern Cross said Telstra’s share purchase and capacity purchase are inter-conditional, and subject to definitive documentation and regulatory approval.

“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,” said Southern Cross Cables president and CEO Anthony Briscoe.

Telstra is also a member of the consortium backing the INDIGO cable system, which will stretch from Singapore to Perth, via Jakarta, and from Perth to Sydney.

In September the first section of the 4600km INDIGO West cable was landed at Floreat Beach in Perth. In October, a section of the 4850-kilometre INDIGO Central submarine cable was landed at Sydney’s Coogee Beach.

ASC outage

One of the subsea cables landing on Australia’s west coast is currently out of action.

Earlier this week Vocus confirmed a fault on its Australia Singapore Cable (ASC) system.

The cable system was declared ready for service in mid-September. The fault has hit traffic between Perth and Singapore, but Indonesia to Perth has not been affected.

“Rectification is expected to be completed within three weeks,” Vocus said in an update yesterday.