Telstra to buy 25% stake in Southern Cross Cable Network, lease capacity in Southern Cross NEXT

Telstra has signed a deal to secure capacity on both the current Southern Cross submarine network and the upcoming Southern Cross NEXT submarine cable. It has doubled down on this capacity commitment by agreeing to buy a 25% stake in Southern Cross Cable Network (SCCN), the company that operates the current submarine network and will operate the NEXT system. Terms of the deal were not disclosed.

The two purchase agreements are interconditional and subject to definitive documentation and relevant regulatory approvals. If the purchase agreement is consummated, Telstra will join existing SCCN shareholders Spark New Zealand, Singtel, and Verizon Business.

The Southern Cross submarine cable network comprises a pair of submarine cables that connect Australasia to the U.S. West Coast and began operations in 2000. The submarine networks, which have received several upgrades, leverage transmission equipment from Ciena (see, for example, “Southern Cross Cables upgrades submarine network with Ciena GeoMesh Extreme”). Meanwhile, SCCN has started development of Southern Cross NEXT, which the company envisions as a high-capacity, 12,250-km express route between Sydney, Auckland, and Los Angeles that is scheduled for completion by the end of 2020 at a cost of US$300 million (see, for example, “Southern Cross NEXT submarine cable system survey completed”).

“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,” explained Telstra Group Executive for Enterprise Michael Ebeid. “This route is extremely important to our business as U.S. 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 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 U.S. via Los Angeles. 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,” added Southern Cross Cables President and CEO Anthony Briscoe.

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