Nextgen and Vocus ink deal to revive the stalled Australia -Singapore Submarine Cable project

The Australia-Singapore submarine cable project has finally moved into a revival mode. The stalled project by Nextgen Network for laying submarine cable from Perth to Singapore will now start in June 2016. This follows a Memorandum of Understanding the former signed with Vocus Communications, offering it a 50 percent stake in the project. Under the proposal, Vocus and Nextgen will form a 50/50 joint venture to build the Australia Singapore Cable through a 4600km cable.

Nextgen’s initial proposal was that the cable would hit land near City Beach and then run to the company’s data centre in Shenton Park. Restarting the 100 Gbps project has assumed urgency as West Australia needs an alternative to the trouble-prone SeaMeWe-3 cable. The existing SeaMeWe-3 cable has suffered multiple breaks. The successors -SeaMeWe-4 or under-construction SeaMeWe-5 do not extend to Asia.

In a statement, Nextgen said the construction would start in 2016 and take 18-months to build the target. Terminations are planned in Jakarta and Singapore, according to Nextgen CEO David Yuile.

Four year old project

The cable project was announced in 2011, with Nextgen projecting Alcatel-Lucent as building the cable. Its subsidiary, Australia Singapore Cable Limited also assured the service to start by the second quarter of 2015. At that time Nextgen was owned by Leighton Holdings, now called CIMIC.

However, the project trailed as money crunch haunted it despite Canada's Ontario Teacher's Pension Plan buying 70 percent stake in Nextgen. Adding to it was competing proposals for the same route from Trident adding to the roadblocks. Investors also wanted assured customers to sign up before starting the work.

According to the filing made by Vocus at the Australian Securities Exchange, the ASC project will be funded by a combination of cash, debt, and customer pre-sales, reports The Register.

Vocus benefit

The deal is reportedly for US$140 million (AU$199 million), reports The Sydney Morning Herald. The deal is expected to have a smooth sailing as Vocus is cash-rich and is set to become a $3 billion telecommunications giant with its planned merger with M2 Group.

The ASC partnership would also elevate Vocus as a major infrastructure player in Australia and help in slashing the costs of broadband services to internet service providers and become a boon for corporate customers, working with offices in Asia. Analysts also not rule out Vocus eyeing Nextgen's network of communications cables that run between Australia's capital cities.

Submarine cables are considered the arteries of the digital world that run along the sea bed and carry 97 percent of the world's phone and internet traffic.

For feedback/comments, contact the writer at feedback@ibtimes.com.au or let us know what you think below.