Vocus to pay $US58.8 million for increased capacity on Southern Cross cable

Vocus to pay $US58.8 million for increased capacity on Southern Cross cable

Purchase to help company meet rapid growth in data demand

Vocus Communications CEO James Spenceley.

Vocus Communications CEO James Spenceley.

Vocus is set to increase it data capacity ten-fold after striking a $US58.8 million purchase agreement to use the underwater cable which connects Australia and New Zealand to the US.

The purchase of additional capacity on the Southern Cross cable will help the company meet the rapid growth in internet data demand.

In contrast to previous upfront capacity purchases, capacity will be allocated and paid in annual instalments over a six year period starting in December 2015.

As a result, the asset and liability relating to these purchases will be recognised incrementally as capacity is allocated, instead of upfront.

In line with previous purchases, the capacity is for the life of the cable, currently to 2030.

Vocus chief executive, James Spenceley, said the favourable structure of the new agreement aligns the asset, liability and amortisation to expected use.

"this significant increase in capacity enables Vocus to continue to leverage the high growth in data demand from the wholesale and enterprise sectors," he said.

"Given its reduncant and protected nature, Southern Cross capacity is a valuable assest and a key differentiator for Vocus."

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