Telstra takes 25% stake in Southern Cross and backs new cable

18 December 2018 | Alan Burkitt-Gray

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Telstra is to buy a 25% stake in the Southern Cross cable network and will use “substantial capacity” in the new Southern Cross Next subsea cable.

Southern Cross Next will connect data centres in Sydney, Auckland and Los Angeles and it is scheduled for completion by the end of 2020.

Southern Cross CEO Anthony Briscoe said: “We are delighted that Telstra has committed to the cable as an anchor customer, and more so that Telstra sees the value in our capability long-term and is set to take a stake in the company.”

Telstra joins existing shareholders Spark New Zealand, Singtel and Verizon Business in the Southern Cross project, which links New Zealand, Australia, the Pacific Islands and the US.

None of the parties has given a price for Telstra’s investment, which is subject to regulatory approvals.

Michael Ebeid, Telstra group executive for enterprise, said: “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.”

Southern Cross says that Southern Cross Next will be the lowest latency path from Australia and New Zealand to the US.

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

Southern Cross Next will be 12,250km long and is expected to cost around $300 million. It is designed to carry data at the rate of 72Tbps.

Briscoe said: “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.”

Singtel’s role in the Southern Cross project means that its Australian subsidiary, Optus, is also a user of its capacity.

Ooi Seng Keat, vice president of the Singapore operator’s carrier services and group enterprise unit, said: “The Southern Cross Next cable will be a new data superhighway expanding the existing Southern Cross network, enhancing network redundancy and providing the lowest latency route from Australia to the US.”