Singapore Cable to Come Online Ahead of Schedule, Vocus Says

Vocus has announced a revised timeline for completion of the Australia Singapore Cable, with the telco saying today that expects it to go live in July 2018.

ASC Cable Map

Source: Vocus

The cable had originally been expected to be completed in September next year.
Vocus Group CEO Geoff Horth said that the earlier go-live date came from condensing the program of works.

“The Vocus and Alcatel build teams are familiar with each other having worked together on the successful delivery of our North West Cable System, which has facilitated the shorter timeframe for completion,” the CEO said.

The submarine cable project was acquired as part of the company’s 2016 deal with Nextgen Group. Under the A$861 million (US$682M) deal, Vocus obtained Nextgen Networks, the North West Cable System, and the Australia Singapore Cable project. The North West Cable System went live last year.

The 4,600km ASC cable will have four fibre pairs.

Construction work is currently underway at ASC landing sites in Singapore, Indonesia, and Perth, according to Vocus.

Horth said that Vocus has a first to market advantage of about 18 months to two years over other efforts to construct a new submarine cable from Australia to Singapore.

“We’re receiving interest not just from Australia but we’ve also had significant interest from Asia,” he told Computerworld. “The ASC provides a safer route from Asia to Australia but also through to the US, and that’s generating some interest.”

In April, a consortium comprising AARNet, Google, Indosat Ooredoo, Optus parent company SingTel, SubPartners, and Telstra announced it would construct the INDIGO cable system, which also aims to connect Australia, Indonesia, and Singapore. INDIGO will be based on two fibre pairs. Trident Subsea Cable is constructing a cable system that will also land in the three nations.

Source: www.computerworld.com.au

ANALYSIS: This project was initiated in 2011 by Leightons, a large Australian construction firm, which owned national backbone provider, NextGen. One month after announcing ASC, Leightons got into financial difficulties and put its telecom assets, including NextGen and the ASC project, up for sale.

It took three years for Leightons to find a buyer in the Ontario Teachers’ Pension Plan, one of Canada’s biggest fund managers. Meanwhile, the ASC project languished and was considered by most to be “dead”.

However, in November 2015, Vocus and NextGen agreed to jointly build the ASC cable which then led to Vocus acquiring NextGen a year later. Once again, the ASC project was put on hold while the acquisition deal went through.

Two months later, Vocus had put the turnkey supply contract with Nokia Alcatel Submarine Networks (ASN) into force with the first down payment.

There remains a question mark over how Vocus is funding the project. A statement to the Australian Stock Market in December 2016 indicated “The ASC project is expected to cost c.US$170M over the build period.

Payments made during FY17 will be funded from existing debt capacity, while payments made in FY18 and beyond will be funded from a combination of existing debt capacity, operating cash flow and expected customer pre-payments for Indefeasible Rights of Use (IRU) agreements. Vocus currently expects to receive IRU pre-payments of approximately $US100M during the build period.” This is a challenging target to achieve on an unproven route with customers eyeing the likelihood of other systems being built and driving down prices.

On the bright side, the above article incorrectly states that Trident is still developing its cable for the Perth-Singapore route. Trident has abandoned plans for a cable and is focused on re-selling bandwidth on Indonesian submarine cables. ASC now faces competition only from the Indigo consortium and the old SEA-ME-WE-3 consortium cable.