New Pacific cable now fully funded, no sign of Kim Dotcom’s cable though

During the 2014 election Kim Dotcom promised to build a second cable crossing of the Pacific. Like everything else he says or promises, nothing has come of it.

Meanwhile Hawaiki has managed to fully fund their proposal.

After trying to drum up funds since 2006, Hawaiki Cable says it has finally funded a $US350 million fibre cable that will link Australia-New Zealand and the US. It says the build will begin in mid-2018.

If the cable goes ahead, it will break the monopoly the 50% Spark-owned Southern Cross cable has enjoyed on the route since 2000. Southern Cross dividends account for around $60 million of Spark’s profit each year (including $26 million in the first half of 2016).

No one involved with Hawaiki Cable will comment on the funding in detail, but spokeswoman Michelle Boag says the project will turn on three sources of funding:

  • Customer pre-sales (all confirmed now that the project has turned “contract in force” with US company TE Subcom, which will build the cable)
  • Equity – all New Zealand based: Rich Listers Malcolm Dick and Sir Eion Edgar, plus Hawaiki founder and chief executive Remi Galasso
  • Debt provided by TE Subcom

All refuse to say how much they’ve chipped in, or what percentage of the project will be funded by TE Subcom’s vendor financing.

I don’t like their hopes for the future as Michelle Boag is involved. Everything she touches turns to poo. But, it sounds like they do have at least one customer.

The only hard number comes from the Crown-owned network operator Reannz, which provides bandwidth for government-owned research institutes and universities. Spokesman Kelly Bennett confirms Reannz will buy $15 million in bandwidth once the cable is built. The money comes from the government as part of a long-standing offer to back a new international cable contender. Mr Bennett says Reannz will buy more bandwidth in future from its operational funding, but the amount is confidential.

Hawaiki says its 14,000km cable will provide 30 terabit/s of bandwidth (more than Southern Cross, although spend enjoyed by an end user via any cable depends on how much their ISP is willing to spend on international capacity). It will detour in Hawaiki before landing in Oregon on the US West Coast.

Speaking to NBR this morning, Sir Eion said, “Our modelling shows within a five year period it should be profitable. But hopefully if will be sooner.”

Sir Eion says anchor customers are signed up. Hawaiki is also talking to “15 major companies” mostly in the US.

Breaking of monopolies through commercial means is always good.



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