Vocus and Spark form Connect 8 joint venture

New Zealand's largest telco, Spark, has teamed up with Vocus Communications to create a new company focused on fibre construction in NZ.

Australian fibre network and datacentre company Vocus Communications has entered into an agreement with Kiwi telco Spark New Zealand to form a new construction joint venture, Connect 8.

Under the joint-venture deal, Spark will acquire half of Connect 8 for an upfront cash payment and an agreed level of annual construction spend, while Vocus will also put up an agreed level of annual construction spend to the joint venture. The amounts weren't disclosed.

After an initial startup period, Connect 8 is expected to have an annual committed revenue pipeline of between NZ$15 million and NZ$17 million, and will continue to build fibre and telecommunications assets for Vocus, Spark New Zealand, and other New Zealand clients, Vocus said in a statement to the Australian Securities Exchange (ASX) on Wednesday.

ASX-listed Vocus describes itself as the leading independent provider of wholesale and telecommunications services in Australia and New Zealand, providing internet, fibre, Ethernet, and datacentre services.

Vocus chief executive James Spencely said the joint venture and its committed pipeline will help smooth out earnings volatility from its construction division.

The Vocus New Zealand construction division was acquired as part of its 2014 NZ$115 million purchase of fibre-line provider FX Networks, which owns a national 4,132 kilometre intercity fibre internet network.

Spark chief operating officer David Havercroft said the joint venture puts Spark in an even better position to help New Zealand businesses navigate a digital future in which fibre will become increasingly important.

"Spark New Zealand already has 8,000 kilometres of fibre cable in New Zealand. This, paired with the Optical Transmission Network -- the core data transport network -- connects more cities, exchanges, and datacentres than any other network provider in the country, " he said.

AAP