Superloop acquires subsea cable company SubPartners

Superloop has acquired submarine cable construction company SubPartners for approximately $2.5 million following its announcement of the new Indigo subsea cable being built with Google, Telstra, Singtel, and others.
Written by Corinne Reichert, Contributor

Asia-Pacific fibre infrastructure company Superloop has announced the acquisition of submarine cable construction company SubPartners for $2.5 million.

The acquisition will occur via the issue of 1,451,869 fully paid ordinary shares in Superloop at an issue price of $2.255 per share.

According to Superloop, the acquisition will provide it with important APAC submarine cable capacity and assets across the region, including the newly announced Indigo subsea cable system connecting Sydney, Perth, Singapore, and Jakarta.

Being built alongside Google, Singtel, Telstra, AARNet, Indosat Ooredoo, and Alcatel Submarine Networks, the Indigo cable will span around 9,000km, with two fibre pairs and a design capacity of 18Tbps, and is expected to be completed by mid-2019.

Once the Indigo cable system is complete, Superloop said it will have access to 4.5Tbps-capacity fibre, which it will be able to increase over time.

Australian technology entrepreneur Bevan Slattery, who is the founder and CEO of both Superloop and SubPartners, said the subsea cables would connect with Superloop's existing metro fibre networks.

Shareholders will be asked to approve the issue of shares to Slattery, who already owns 80 percent of SubPartners and 28.8 percent of Superloop; should this not be approved, Slattery will be paid cash consideration of around $2 million for the acquisition.

As part of the acquisition, Superloop has guaranteed SubPartners' construction capital, operating, and maintenance commitments in relation to the Indigo subsea cable, which involves a total capex of around $35 million to $37 million out to FY20.

"SubPartners is also responsible for the procurement, provision, operation, and maintenance of the shore end infrastructure for Indigo Central in Sydney, and will receive fees of approximately $5.3 million from the Indigo consortium over FY17 and FY18," Superloop added.

(Image: Screenshot by Corinne Reichert/ZDNet)

SubPartners, founded by Slattery in 2012, was formed with the aim of building a subsea cable connecting the west coast of Australia with Singapore. According to Slattery, the cost of operating the cable has been reduced significantly by the sharing of ownership between the parties.

Telstra and Singtel entered a memorandum of understanding with SubPartners just over a year ago to construct the APX-West Perth to Singapore subsea cable, which will be 4,500km long, with two fibre pairs providing a minimum of 10Tbps capacity each pair and two-way data transmission.

Telstra had initially signed a memorandum of understanding with SubPartners for capacity on the subsea cable more than four years ago, in March 2013, with completion of the cable expected by 2018.

Superloop also recently completed construction of its 1,728 fibre core Hong Kong subsea cable TKO Express, which connects Chai Wan on Hong Kong Island and Tseung Kwan O (TKO) Industrial Estate -- Hong Kong's new major hub for technology, datacentre, financial, and media companies, as well as submarine cable landing stations -- on the mainland.

The acquisition of SubPartners follows Superloop last year also buying out BigAir, which was approved by shareholders in December.

The purchase was funded by AU$65 million raised in September, AU$75 million via new revolving debt facility with ANZ bank, and AU$104 million in scrip issued to vendors.

Superloop said it would combine its fibre assets with BigAir's wireless network and capabilities in order to provide a high-speed wholesale alternative to the National Broadband Network (NBN) across outer metro and regional areas.

The BigAir acquisition will also allow Superloop to accelerate its fibre rollout across Australia, Slattery said, and make use of BigAir's fibre-extender millimetre wireless solution for services within a 1km to 4km radius.

Combined with Superloop's fibre network, it claims to deliver a low-cost 10Gbps download/10Gbps upload access alternative to NBN, while also avoiding NBN's CVC charge, which Slattery has previously labelled "galactically stupid pricing".

Superloop in February also signed a capacity agreement with Vocus Communications, giving it a 15-year indefeasible right of use for international, inter-capital, and regional Ethernet access and metropolitan fibre capacity across Australia.

Under the AU$20 million deal, Superloop will upscale Vocus' metro, national, and international capacity, which will increase the value of its BigAir acquisition, with services to begin coming online in July 2017.

Superloop reported a net loss of AU$2 million for the first half of the 2017 financial year, improving on the AU$3.5 million loss recorded for FY16, on reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) of negative AU$6.5 million.

Superloop's revenue jumped by 351 percent year on year to reach AU$8.8 million.

ASC locks in final design with Alcatel Submarine Networks

Vocus has also announced that it has reached a final agreement with Alcatel-Lucent Submarine Networks -- now a division of Nokia -- on the design and technical specifications of its own subsea cable system, the Australia Singapore Cable (ASC).

Originally a 50-50 joint-venture deal between Vocus and Nextgen Networks, the 4,600km ASC cable will connect Perth with Singapore and Indonesia, with completion set for August 2018 at a cost of $170 million. A deal signed between Vocus and Nextgen Networks in November 2015 pinned the cost of the cable at around $120 million.

Vocus subsequently purchased Nextgen Networks for AU$700 million in June last year, with Vocus and Alcatel-Lucent Submarine Networks in December signing an agreement to build the ASC.

The cable comprises a four-pair fibre system with a minimum total capacity of 40Tbps; the option to connect the system to Vocus' cable landing station in Port Hedland, Western Australia, in future; and a branch providing 150x100Gbps per fibre pair between Singapore and Indonesia.

"We believe that the four fibre pair configuration establishes a major technical advantage over lower fibre count systems due to the underlying flexibility and reliability of this solution," Vocus CEO Geoff Horth said on Thursday.

"ASC will rebalance the architecture of Australia's national information infrastructure and diminishes an historic reliance on Sydney as the default exit point for its international traffic."

Vocus also owns the North West Cable System (NWCS) following its purchase of Nextgen Networks, which was activated by Nextgen Group and Alcatel-Lucent Submarine Networks in September last year. The $139 million 2,100km fibre-optic submarine cable connects Darwin and Port Hedland, and has been integrated into Nextgen's 17,000km land-based transmission network and Metronode's datacentres across Australia, also connecting to offshore oil and gas facilities.

In addition to Indigo, APX-West, TKO Express, NWCS, and the ASC, also being built across the Asia-Pacific region are subsea cables the Tasman Global Access (TGA); the Trident Subsea Cable; the Hawaiki cable; the Asia-Pacific Gateway (APG); and the FASTER cable.

TGA was switched on last week, connecting New Zealand with Australia thanks to a partnership between telecommunications carriers Telstra, Spark, and Vodafone. The $100 million 2,288km submarine cable, which extends from Ngarunui Beach in Raglan to Narrabeen Beach in Sydney, is made up of two fibre pairs with a total capacity of 20Tbps.

The 28Tbps two-pair fibre-optic, 1,070-kilometre Trident subsea cable, meanwhile, will connect Singapore, Indonesia, and Australia, with stage one slated to go live this month and the entire cable to be completed by the second quarter of 2018. It utilises 100Gbps coherent dense wavelength division multiplexing (DWDM) technology, which is upgradeable to 400Gbps.

Elsewhere in the Asia-Pacific region, the 30Tbps, 14,000km Hawaiki cable -- which finally commenced construction in April last year -- will connect Australia and New Zealand to Hawaii and the West Coast of the United States, with the option to extend to several South Pacific islands along the route via optical add/drop multiplexing nodes, by mid-2018.

The 10,000km FASTER subsea cable system will also connect the west coast of the United States with Asia, landing in Japan and consisting of six fibre pairs and making use of 10Gbps wave technology.

NEC also recently announced the completion of the 54Tbps APG subsea cable between China, Hong Kong, Japan, South Korea, Malaysia, Taiwan, Thailand, Vietnam, and Singapore. The 10,900km fibre-optic submarine cable is owned by a consortium of telecommunications carriers including China's China Telecom, China Unicom, and China Mobile; Japan's NTT Communications; South Korea's KT Corporation and LG Uplus; Singapore's StarHub; Taiwan's Chunghwa Telecom; Thailand's CAT; Malaysia's Global Transit Communications; and Vietnam's Viettel and VNPT.

Australia's incumbent telco Telstra acquired a 36,000km cable network system connecting China, Japan, Singapore, South Korea, Taiwan, Hong Kong, and the Philippines as part of purchasing Pacnet for $697 million in December 2014, and in May also announced the Bay of Bengal Gateway (BBG) 8,000km 100Gbps submarine cable system, made up of three fibre pairs, which will connect Singapore, Malaysia, India, Sri Lanka, Oman, and the United Arab Emirates.

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