Telstra has entered into an agreement to acquire a 25 per cent stake in Southern Cross Cable Network (SCCN) and substantial capacity on both the existing network and the new Southern Cross Next subsea cable.
The announcement was welcomed by SCCN and its shareholders which includes Spark New Zealand, Singtel and Verizon Business.
SCCN owns and operates the trans-Pacific Southern Cross Cable and has initiated work on the Southern Cross Next cable.
Telstra's share acquisition is subject to regulatory and other approvals.
“Telstra has long been a key customer of Southern Cross and this investment will mean Telstra has an immediate ownership interest in the existing Southern Cross network, as well as in Southern Cross Next," said Michael Ebeid group executive for enterprise at Telstra.
"This route is extremely important to our business as US to Australia traffic accounts for more than 80 per cent of all the internet traffic to Australia.
"Southern Cross builds on Telstra’s existing footprint in Asia Pacific and creates a critical new path for ‘Australia In’ and ‘AustraliaOut’ connectivity."
Southern Cross Next is expected to be a high capacity express route, providing data-centre connectivity between Sydney, Auckland and Los Angeles and is scheduled for completion by end-2020.
According to SCCN, given its design and route, it will be the lowest latency path from Australia and New Zealand to the United States.
Southern Cross Next is expected to cost around US$300 million, and is designed to carry 72 Terabits of traffic.
"We are delighted that Telstra has committed to the cable as an anchor customer, and more so that Telstra sees the value in our capability long-term and is set to take a stake in the company,” added Anthony Briscoe, president and CEO of Southern Cross Cables.