Vocus continues fibre optic network expansion

Sizes up New Zealand, Asian growth options.

Vocus Communications plans to add 40km of fibre optic cable to its network in the coming financial year, further expanding its reach.

The ASX-listed network and data centre provider said it reached 176km of cable by the end of June this year, and was currently at 235km - a 298 percent increase on its network presence in FY11.

The network connected 43 data centres and 166 other buildings.

Fibre capacity utilisation was hovering at less than five percent, suggesting room for growth.

Revenue from its fibre and Ethernet business was $5.4 million in Financial Year 2012, compared to $1.8 million in FY11.

Vocus' data centre business also saw strong revenue growth, climbing from $3.1 million in FY11 to $9.4 million in FY12.

CEO James Spenceley told iTnews that Vocus is evaluating data centre plans and capital expenditure budgets for the next 12 to 18 months.

Vocus has already leased some space in NextDC’s facility in Melbourne, as its own 490m2 facility in Melbourne is at capacity.

The company’s 536m2 Perth data centre is also close to full utilisation, standing at 93 percent.

Staffing increases are on the cards, according to Spenceley.

“We have recently expanded our sales, provision and support teams across both Australia and New Zealand,” Spenceley said.

“We expect to continue to increase the number of staff in sales and support in the next 12 months. An early estimate would be an addition of four to six staff."

Expanded New Zealand operations

In August this year, Vocus bought New Zealand ISP and data centre operator Maxnet for NZ$9.5 million ($7.4 million), giving it colocation facilities in Auckland and Christchurch in the south island of the country, 420m2 and 128m2 in size respectively, and 50 employees.

The Maxnet brand has since been dropped in favour of Vocus, and the company intends to expand the Albany, north Auckland data centre.

“We are currently in the planning and design phase. However, we anticipate an increase of approximately 50 percent of the floor space of the existing data centre,” Spenceley said.

He declined to reveal the cost or timeframe for the expansion plans.

Vocus expects to gain some green credentials through the Auckland data centre, as it is deemed carbon neutral.

“Compared to our data centres in Australia, the power used by our New Zealand DC is completely renewable, “ Spenceley  said.

He also expects the New Zealand NBN, the Ultra-Fast Broadband FTTP project to be a driver for Vocus.

“We think UFB will be a positive for the business, “ Spenceley said.

“Getting fibre out to more people increases usage and requirements for connectivity and data storage.

“The UFB access to fibre resources between exchanges is already having a positive on the business by greatly reducing the cost of connectivity to and from the data centre to major business hubs. “

Spenceley declined to comment on whether or not Vocus is considering being involved in a new trans-Tasman cable.

He has expressed unhappiness with the limited interconnect options in Auckland in public Internet industry discussion forums, and said that recent regulatory changes made it possible to buy the Maxnet data centre at the northern end of the town, as it is now possible to have fibre capacity to there from the main peering point, the Sky Tower in the CBD.

Asia growth

Vocus is also looking north for new business opportunities, and Spenceley said Vocus' Asian business is growing via the company’s point of presence in Singapore.

“The Singapore POP has significantly increased out visibility with Asian telcos and as a result we are seeing request for local fibre tails across our metro fibre network in Australia and data centre and hosting requirements in both Australia and New Zealand, “ he said.

Asked how much more capacity the provider will need to meet future expansion, Spenceley said it “is a moving number” that will depend on growth in the retail sector's usage and the Vocus' customers' own growth.

“We constantly look at capacity options on various cables and will make the decision as to route and capacity closer to the time period demanded by our usage. “