Story image

Vocus and Spark form construction joint venture for fibre

04 Feb 2015

Vocus Communications, the Australian fibre network and datacentre company, 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 spent to the joint venture. The amounts weren't disclosed.

After an initial start-up period, Connect 8 is expected to have an annual committed revenue pipeline of between $15 million and $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 ASX today.

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 8000 kilometres of fibre cable in New Zealand.  This, paired with the Optical Transmission Network (OTN) - the core data transport network - connects more cities, exchanges and data centres than any other network provider in the country, " he said.

The ASX-listed Vocus describes itself as the leading independent provider of wholesale and telecommunication services in Australia and New Zealand, providing internet, fibre and ethernet, and data centre 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 $115 million purchase last year of fibre-line provider FX Networks, which owns a national 4132 kilometre inter-city fibre internet network and had annual revenue of more than $50 million and more than 3,000 clients.

The construction division has average annual revenues of $11 million and Ebitda of around $3 million, although with significant volatility, Vocus said.

As a result of the joint venture, the construction division’s first-half Ebitda contribution of $1.5 million won’t be realised, Vocus said, although it expects ongoing baseline annual Ebitda from the joint venture of $2.3 million from its first full financial year.

Vocus Communications and Spark New Zealand will be equally represented on the Connect 8 board and receive equal distributions of profits.

Cloud application attacks in Q1 up by 65% - Proofpoint
Proofpoint found that the education sector was the most targeted of both brute-force and sophisticated phishing attempts.
Huawei to deploy Open Rack in all its public cloud data centres
Tech giant Huawei has unveiled plans to adopt Open Rack proposed by the Open Compute Project in its new public cloud data centres across the globe.
Beyond renewables: Emerging technologies for “greening” the data centre
Park Place Technologies’ CEO shares his views on innovations aside from renewable energy that can slim a data centre’s footprint.
Interview: Cisco on digital transformation and data centres at the edge
"On-premise we speak English, Amazon speaks French, and Amazon and Microsoft speak something else. But someone has to translate all of that and Cisco is involved with normalising those rule sets.”
Flashpoint: APAC companies must factor geopolitics in cyber strategies
The diverse geopolitical and economic interests of the states in the region play a significant role in driving and shaping cyber threat activity against entities operating in APAC.
CITIC Telecom’s Hong Kong data centre begins new expansion phase
The tech giant celebrated a groundbreaking ceremony this week to commemorate the expansion.
Opinion: 5G’s imminent impact on data centre infrastructure
Digital Realty’s Joseph Badaoui shares his thoughts on how 5G will transform data centre infrastructure now and beyond.
SolarWinds extends database anomaly detection
As organisations continue their transition from purely on-premises operations into both private and public cloud infrastructures, adapting their IT monitoring and management capabilities can pose a significant challenge.