Southern Cross confirms Telstra’s NEXT role

Burgstedt |

Southern Cross Cable Network has announced it has signed agreements and received regulatory approval for Telstra to become a 25 per cent shareholder of the company and an anchor customer of the Southern Cross NEXT undersea data cable.

Telstra announced in December 2018 it had entered into anagreement to purchase a 25 per cent stake in Southern Crossand substantial capacity on both the existing network andNEXT, but said both deals were subject to definitivedocumentation and relevant regulatory approvals.

Southern Cross first flagged plans for NEXT in January 2016and confirmed these in September 2016, saying it aimed tohave the system in operation by 2020.

In March 2017,the company said seven organisations hadsigned letters of intent to use NEXT, including “three majorAustralasian carriers and four Pacific islands,” but did not nameany of them.

In April 2019, Alcatel Submarine Networks won the contract tosupply the system. Southern Cross said NEXT would add 72terabits per second of capacity to the 20 terabits of potentialcapacity on current Southern Cross systems.

Announcing the Telstra deal today, Southern Cross said NEXThas been developed as an extension of the existing SouthernCross cable ecosystem and when completed was expected tobe the lowest latency path from Australia and New Zealand tothe United States.

The company said build costs for NEXT were expected to beapproximately US$300 million and would be funded via acombination of debt held by Southern Cross; retention ofdividend streams from the existing cable network during thebuild phase, and further equity investment by Southern Crossshareholders.

As a consequence of Telstra becoming a Southern Crossshareholder, Spark’s shareholding in Southern Cross will bediluted from 50 per cent to approximately 40 per cent.

Spark expects to contribute a total of between $70 and $90 million of equity across FY20, FY21 and FY22.

Copyright © 2019 IDG Communications, Inc.

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