What does Telstra want for Christmas? Apparently the answer is a bigger share of the Pacific submarine cable business. The Australian telecommunications provider is doing a deal to buy a quarter of Southern Cross.
Southern Cross operates subsea cables between Australia, New Zealand, Hawaii, and the west coast of the USA. They have a new cable on that route planned, NEXT, the $350M or so funding of which is what this deal is of course about. NEXT will put another 60Tbps of capacity into play.
Currently, New Zealand's Spark owns 50.01% of Southern Cross, with Singtel/Optus owning 39.99% and Verizon the remaining 10%. Assuming regulators don't get hot and bothered by the deal announced today, that will change to Spark 37.5%, Singtel/Optus 30%, Telstra 25%, and Verizon 7.5%.
Telstra will also be buying 'substantial' capacity on both new and old cables. Southern Cross gained some new competition over the last year or so in the form of the Hawaiki transpacific cable and the Tasman Global Access cable.