Story image

Vocus and Spark form construction joint venture for fibre

04 Feb 15

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.

MulteFire announces industrial IoT network specification
The specification aims to deliver robust wireless network capabilities for Industrial IoT and enterprises.
Google Cloud, Palo Alto Networks extend partnership
Google Cloud and Palo Alto Networks have extended their partnership to include more security features and customer support for all major public clouds.
DigiCert conquers Google's distrust of Symantec certs
“This could have been an extremely disruptive event to online commerce," comments DigiCert CEO John Merrill. 
Schneider Electric's bets for the 2019 data centre industry
From IT and telco merging to the renaissance of liquid cooling, here are the company's top predictions for the year ahead.
China to usurp Europe in becoming AI research world leader
A new study has found China is outpacing Europe and the US in terms of AI research output and growth.
Google says ‘circular economy’ needed for data centres
Google's Sustainability Officer believes major changes are critical in data centres to emulate the cyclical life of nature.
52mil users affected by Google+’s second data breach
Google+ APIs will be shut down within the next 90 days, and the consumer platform will be disabled in April 2019 instead of August 2019 as originally planned.
Ramping up security with next-gen firewalls
The classic firewall lacked the ability to distinguish between different kinds of web traffic.