Spark New Zealand and Australian backbone operator Vocus Communications have agreed to set up a joint venture to build fibre-optic cabling in New Zealand under the name Connect 8.
Vocus will spin off its existing New Zealand fibre construction business…
Spark New Zealand and Australian backbone operator Vocus Communications have agreed to set up a joint venture to build fibre-optic cabling in New Zealand under the name Connect 8.
Vocus will spin off its existing New Zealand fibre construction business into the new venture, which Spark will then buy 50% of for an undisclosed upfront cash payment.
Connect 8 will construct fibre and telecoms infrastructure for Spark, Vocus and other customers. Both partners have agreed to annual construction spends, and Connect 8 is expected to have an annual committed revenue pipeline of NZ$15-17m (US$11-13m).
On average, Vocus’ New Zealand unit has generated annual revenues of NZ$11m (US$8m) and EBITDA of NZ$3m (US$2m), although the Australian group said there had been “significant volatility from period to period”.
Vocus’ CEO, James Spenceley, said the Connect 8 joint venture, with its committed pipeline, would help mitigate earnings volatility from the construction division and give it a stable earnings profile in New Zealand.
Spark and Vocus will have equal representation on Connect 8’s board and receive an equal share of the profits.
Spark already has 8,000km of fibre in New Zealand and Vocus has 4,200km. These assets will not be held by the new venture, nor will the cabling it builds.
Tim Miles, head of Spark’s business division Spark Digital, said that Connect 8 will benefit his unit as it continues to reposition its focus to cloud infrastructure, mobility, managed ICT and platform-as-a-service.
“We know that the potential benefits of fibre are still largely untapped by New Zealand businesses, and that flexibility of construction and delivery can be one of the challenges in making the most of that opportunity,” Miles said in a statement.
Spark, formerly Telecom New Zealand, is New Zealand’s incumbent telecoms operator and was privatised in 1990. It offers mobile, fixed-line and broadband services to consumers, as well as data and ICT services.
Vocus owns and operates local telecoms networks in Australia and New Zealand and connects the countries to the global internet backbone. It also operates data centres and dark fibre.
