Telstra is buying into the Southern Cross Cable Network and has agreed to take a 25 percent stake in the trans-Pacific link by "investing in new shares" the Australian carrier said today.
The buy-in will leave the New Zealand telco incumbent Spark with a 37.5 per cent share after dilution, along with Singtel-owned Optus which has 30 per cent, and United States telco Verizon with 7.5 per cent.
The share and capacity purchases are inter-conditional and subject to final documentation and regulatory approvals.
Along with the quarter-stake in the cable, Telstra is looking at purchasing additional capacity on the existing Southern Cross link, and the planned NEXT extension between Australia, New Zealand and the United States.
NEXT is expected to cost US$300 million and be ready by end of 2020, but it's not yet fully funded.
Spanning 12,250 kilometres, NEXT was originally designed to provide 60 terabit per second capacity.
This has now gone up to 72 Tbps, which is over three times the expected capacity of the original Southern Cross Cable after equipment upgrades.
Latency on NEXT is said to be 110-120 milliseconds for packet round trips, lower than than the 130-140ms delay on the original Southern Cross Cable.
According to Telstra group executive for enterprise, Michael Ebeid, the Southern Cross Cable carries more than 80 per cent of all internet traffic to Australia.
While Southern Cross has been the sole provider on the trans-Pacific route since it entered service in the new millennium, it now has competition from the Hawaiki Cable system that was completed in July this year.
Hawaiki spans 15,000 kilometres between Australia, New Zealand and the US.
It can carry up to 43.8 Tbps capacity currently, and announced a 67 Tbps using Ciena equipment in September 2018 and has attracted big-name customers such as Amazon Web Services, Vodafone and the New Zealand government's academic network REANNZ.