Australia Optus, Telecom NZ, SingTel mull cable project
Australia Optus, Telecom NZ, SingTel mull cable project
SYDNEY (Dow Jones): Australia's Cable & Wireless Optus Ltd. said Tuesday it has teamed up with Telecom Corp. of New Zealand Ltd. and Singapore Telecommunications Ltd. to examine the development of a broadband cable that would link Australia to Singapore via Indonesia.
While corporate talks are at an early stage, analysts say there is a good chance the venture will proceed due to ballooning demand for corporate data services in the region.
The proposed cable would stretch 5,800 kilometers and by analyst estimate it could cost about US$250 million. It would slot into an overland network which would effectively link Sydney and Singapore, and pass two-way traffic onto the U.S. through the pan-Pacific broadband cable operated by Southern Cross Cable Network.
Details on the proposed link that would be capable of handling streamed video over the Internet, as well as ordinary data traffic, are scarce.
The companies haven't released any financial details or a timeframe for the cable construction but a person familiar with the situation says they are hoping to have it operational within two years.
Chris Hancock, managing director of Optus data and business services, said in a statement with Telecom NZ and SingTel that the companies had identified a growing need for bandwidth in the Asia Pacific region.
"The Asian region is a large and rapidly expanding market for corporate and IP services. All three companies have identified a growing need for robust infrastructure between Australia and Asia," Hancock said.
"Our customers are demanding more and more bandwidth as they e-enable their businesses," Hancock added.
Indeed, much of the inspiration for the Sydney-Singapore link comes from Southern Cross, which is a joint venture 50 percent- owned Telecom NZ, 40 percent-owned by Optus and 10 percent-owned by Worldcom Inc.
The Southern Cross cable cost US$1.2 billion to build and has already become a cash-cow for its owners, who have received capacity orders totaling US$1.6 billion. Southern Cross paid a maiden dividend of US$200 million, which was split pro-rata between the owners.
Telecom NZ's group general manager of networks Simon Moutter said the new cable would complement the Southern Cross cable which links Australia to the U.S. via New Zealand.
"Our investments in cable have reaped rewards, operationally and financially. Similarly, if this proposal goes ahead, it would be a solid investment opportunity for all three companies," Moutter said.
Andrew Hines, telecom analyst at ABN AMRO, said the proposed cable would complement Southern Cross but, more importantly, would provide an alternative route for data traffic from Asia.
"Strategically it is an important link in terms of getting data out of Asia to the U.S.," Hines said, noting Internet traffic and corporate data currently enter the U.S. from cable links in Taiwan and Japan.
The Sydney-Singapore cable link has yet to be approved by the boards of three companies and must first obtain permits and licenses from the Australian Communications Authority before the venture is formalized.
If the proposal goes ahead a cable using Dense Wavelength Division Multiplexing, or DWDM, technology will be built between Perth, Jakarta and Singapore.