Telstra has confirmed in a statement that it is holding talks with Hong Kong-based telco Pacnet about a potential acquisition.
In a statement released on the Australian Securities Exchange (ASX) on Wednesday, Telstra said: "Telstra confirms that it is in discussions with the owners of Pacnet around a potential transaction to acquire the company."
The statement follows initial reports by Bloomberg, which speculated that a potential deal was going to happen between the two companies.
However, Telstra clarified that despite the talks, nothing may come of it.
"There is no certainty that any transaction will take place as a result of these discussions," the company said.
If the deal does go through, Telstra could potentially acquire more than 46,000 kilometres of submarine cable infrastructure across Asia and the Pacific Ocean. Pacnet currently owns and operates Asia's largest submarine cable infrastructure, EAC-C2C, and the Trans-Pacific cable, the EAC-Pacific, which directly connects the United States to Japan.
It comes as Telstra is focusing much of its growth in the Asia region, particularly for its cloud services.
Pacnet also has three datacentres in Australia, including one that opened in June 2013, as well as 16 other datacentre facilities around the world.
Looking back, the two companies have always been closely aligned. Most recently, the pair, along with IBM and SAP, was selected to provide network services to New South Wales government agencies at the NSW government's datacentre, GovDC.
Telstra and Pacnet also previously shook on a partnership deal worth AU$35 million to supply a range of network and access services, including wholesale ISDN, ADSL2+ broadband, and Ethernet.