A defining milestone in competing efforts to build a subsea telecommunications cable from Perth to Singapore may be imminent, with one of the players close to snookering the opposition.
A defining milestone in competing efforts to build a subsea telecommunications cable from Perth to Singapore may be imminent, with one of the players close to snookering the opposition.
Nextgen Group subsidiary Australia Singapore Cable says it’s on the verge of beginning construction on a submarine cable after obtaining permits to build in Indonesia, with the cable to go to Jakarta.
The Indonesian permit was the last hurdle facing ASC as it sough to start construction, with the company having obtained all other necessary permits and approvals in Australia and Singapore.
A company spokesperson told Business News the approval from Indonesian authorities meant its construction partner, Alcatel-Lucent, could now finalise designs and begin building the cable, which it was planning for March or April.
Landing points have already been built in Singapore, Indonesia and Perth where the cable will be connected to Nextgen’s new data centre in Shenton Park.
The ASC project is one of three submarine cable bids on the table, with Trident Subsea Cable and SubPartners also both working on projects of their own.
Trident formed a partnership with Fujitsu late last year for it to head design and management of its $400 million project.
Its plan includes building a terrestrial cable link from Perth to the Pilbara with a data centre in Port Hedland.
Ausdrill subsidiary Diamond Communications became an investor in the project in December when it signed on as the construction partner for the land-based segment of the cable plan.
Fujitsu has completed desktop scoping studies to define paths for both the marine and terrestrial fibre link and is about to begin a hydrographic study for the Perth-to-Jakarta route.
According to industry experts that multi-million dollar marine survey could take six months, putting it well behind ASC, which completed its marine survey in November 2012.
The push for a new cable is driven by telecommunications companies’ need for more capacity, with the existing Sea-Me-We-3 cable 14 years old and at its limit.
But both Trident and ASC agree there’s only enough demand for one cable, and Trident chief executive Mark de Kock told Business News the first to start building would be the winner.
“The first company to start constructing the cable will get most of the business, and it’s unlikely that a second new cable will be constructed; the commercial returns just won’t be there for a second cable system,” Mr de Kock told Business News last September.
At this stage Trident is expecting to have its total project completed in the third quarter of 2015.
That’s only a few months later than ASC’s projected completion timeframe, around the middle of next year.
ASC is not fazed by the competition; its spokesman said the company was confident of the advantages it offered.
“There are a lot of little bits and pieces that have to be done and that’s really put us 12 to 18 months ahead, which is quite a long time in this business,” the spokesman said.
ASC’s case is strengthened by the financial backing of Nextgen Group shareholders Leighton (30 per cent) and the Ontario Teachers’ Pension Plan (70 per cent).
“These are well-capitalised partners compared to other projects, which are start-ups with the idea of going out and raising money,” the spokesman said.
Trident has secured $320 million from the Beijing Construction and Engineering Group for its $400 million project and is negotiating investments for the remainder.
Like Trident, SubPartners, is at the stage where it has completed desktop studies and has started applying for permits.
Last month it received the tick of approval under the Australian Environmental Protection and Biodiversity Conservation Act, meaning it can finalise its application to the Australian Communications and Media Authority, which will determine whether it can build in Australian waters.
It has also submitted an application with Indonesian authorities for preliminary approval to enter their waters.
The company was established by NEXTDC founder Bevan Slattery, who said the Indonesian permit application demonstrated the momentum and support that APX-West has had.
It’s also working to a June 2015 deadline for completion and said it was 60 per cent complete in terms of securing the required Australian permits.
Progress on obtaining permits in Singapore and Indonesian are at 35 per cent and 25 per cent respectively.
The final remaining factor in each of the proposed projects is founding customers. SubPartners has had significant wins, with both iiNet and Telstra agreeing to become customers.
ASC declined to disclose the names of any companies that had signed on as customers, but said it had received good support from a significant number – indicating it wasn’t relying on a few large founding customers but a larger number of smaller players.
It also benefitted from the fact that Nextgen owned the only fibre link running from Perth to the east coast.
The company said that strengthened its business case, as 80 per cent of demand for the telecommunications cable would come from the east coast, and it was the only proponent able to offer a seamless solution for those customers.
