There's M&A in the wind in the Pacific region today, as Pacnet has apparently attracted some attention from down under. Australia's Telstra has confirmed that it is in duscussions to acquire the company. That's all they said though, responding to speculation from Bloomberg today in a three sentence letter to the Australian Securities Exchange.
The private equity folks who own Pacnet have been looking on and off for a buyer for some years now. At one point, China Telecom kicked the tires, and a bit more recently it was Indonesia's PT Telkom that left them at the altar. Telstra's interest, however, makes a whole lot of sense to me. With the NBN taking hold in their home turf, they've had an increasingly global approach in recent years. There just aren't that many complementary assets with APAC regional depth and breadth available to them that would serve as a stepping stone onto other continents.
Of course, Telstra also has the former Reach assets, which derive from Level 3's aborted Asian buildout from the dot-com era. But beyond the extra submarine cables it would bring, Pacnet's significant data center foothold in China and its SDN-powered nextgen PEN network would fit well in Telstra's plans.
That said, all we know is that they're talking -- there is no indication yet of an actual price tag for a deal. And there are a bunch of countries whose regulators might not be too happy with the idea that would have to sign off on a deal. Other suitors could also be in the mix.
For that matter, if the folks at Telstra are looking at Pacnet, I'd be surprised if they weren't also looking at GCX and Tata Communications -- both of which have also been said to be available in recent years and which could also be quite complementary.
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