Telstra in talks over Pacnet acquisition

Australia’s Telstra has confirmed it is in talks to acquire subsea cable operator Pacnet, in a deal with an estimated price tag of US$1 billion.

Bloomberg released the story earlier this morning and it has now been confirmed by Telstra to local reporters. 

“Telstra confirms that it is in discussions with the owners of Pacnet around a potential transaction to acquire the company,” the operator said. 

However, Telstra added that “there is no certainty that any transaction will take place as a result of these discussions”.

Should a deal materialise, Telstra would acquire more than 46,000km of submarine cable between Asia and the US, enabling the operator to better serve its large corporate clients in the region.

Pacnet has been focussing on its SDN strategy this year and in February, was the first service provider to introduce a customer-facing and controlled SDN platform

“Globally, these sorts of infrastructure assets are highly sought after,” Ross MacMillan, analyst at Morningstar, told Bloomberg. “Telstra is really focussed on getting infrastructure where they know they’re going to get steady, stable cash flows.”

Pacnet’s owners – which include Ashmore Investment Management, Spinnaker Capital and Clearwater Capital Partners – are said to be working with Credit Suisse Group on the sale, and are thought to be seeking a valuation of approximately $1 billion, including debt. 

Telstra has sold off a number of its Asian assets over the last few years, including Hong Kong mobile provider CSL in May 2014.

However, the company has reportedly put aside $1 billion for overseas acquisitions, and is openly looking to establish itself in the Asian market.