Southern Cross Cables touts $218M new capacity sales for 2005

November 7, 2005 Wellington, New Zealand -- The Southern Cross Cables network project recently announced new capacity sales of $218 million for the period March to October 2005. Representatives for Southern Cross say that the project's recent sales reflect strong broadband growth, and have enabled repayment of the bank debt which financed the project from its initial construction in 1998.

Nov 7th, 2005

November 7, 2005 Wellington, New Zealand -- The Southern Cross Cables network project recently announced new capacity sales of $218 million for the period March to October 2005. Representatives for Southern Cross say that the project's recent sales reflect strong broadband growth, and have enabled repayment of the bank debt which financed the project from its initial construction in 1998.

"Our bank debt peaked at $950 million, but by 28 October 2005 this was repaid in full," says Fiona Beck, CEO and president of Southern Cross. "Southern Cross is now in an even stronger position to further improve its network in response to the broadband explosion and to provide returns for its owners."

According to a press release, commissioned for service in November 2000 at a total build cost of $1.3B, the Southern Cross network connects Australia, New Zealand, Fiji, and Hawaii to the U.S. mainland over two diverse submarine fiber-optic cables that form a fully protected ring. The company is jointly owned by Telecom NZ (50%), Singtel-Optus (40%), and MCI (10%).

"There has been a tremendous upsurge in the use of Southern Cross capacity over the last two years. This is in response to very high broadband growth in our primary markets of Australia and New Zealand, where more than one million new subscribers are now being connected annually," explains Ross Pfeffer, sales and marketing director for Southern Cross. "We introduced substantially lower prices for our network capacity earlier this year. Our new prices successfully encouraged telecommunications companies to make large capacity purchases - and the great majority of this capacity will be deployed to support broadband."

In anticipation of an accelerated growth in demand for broadband services, Southern Cross says it completed a major capacity expansion in January 2003, bringing the network's "total equipped and protected capability" to 240 Gbits/sec. The company notes that over the last two years the utilization of its network has more than doubled, and that 32% of the recently equipped network capacity on the network's Australia-Asia-U.S. ring is already in use. The company claims that an additional 10% of its sold capacity is expected to be activated shortly, increasing the network's utilization to over 40%.

"Our customers have again preferred to purchase indefeasible rights to use Southern Cross capacity until 2020, rather than to lease capacity for much shorter periods," continues Pfeffer. "Our direct customers are typically large regional and global telecommunications companies, delivering both dial-up and broadband Internet to over eight million residential and business subscribers in our primary market of Australasia."

"Southern Cross has already sold in excess of 40% of its recently expanded capability, and the demand outlook is so strong it raises a question about the need for another capacity expansion," concludes Beck. "Any upgrade would need to be completed before activated capacity reaches 80% of available capacity, and this could occur within the next 2 to 3 years. The Southern Cross network can readily double its total capacity size at a very low marginal cost."


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