Pacific Fibre signs Australia's iiNet as second customer

Sam Morgan and Rod Drury, two of the backers of Pacific Fibre. Photo / Glenn Taylor

Pacific Fibre, the local start-up looking to build a second internet cable linking New Zealand to the world, has signed up ASX-listed internet service provider iiNet Ltd. in a long-term international capacity deal.

Australia's second-biggest digital subscriber (DSL) broadband provider becomes Pacific Fibre's second customer in a deal starting in 2014. The deal comes a week after the cable company signed up America's TE Connectivity to build its trans-Pacific network, which had previously been given a US$400 million price-tag.

"As a foundation customer with Pacific Fibre, our customers will enjoy some of the fastest paths when accessing international content both now and well into the future," iiNet chief executive Michael Malone said in a statement. "We have always supported competition in the international cable space, and the additional capacity and choice Pacific Fibre is delivering can only be good for both our business and the industry in general."

Pacific Fibre, which is backed by heavyweight entrepreneurs Sam Morgan, Stephen Tindall, Rod Drury and Peter Thiel, will have to win customers over from the Southern Cross Cable network which links New Zealand and Australia to the US.

Southern Cross Cable last month flagged it will upgrade its system next year, with a goal of lifting total potential to at least 6 terrabits per second (Tbps) by 2015.

Pacific Fibre says its network will have ultimate capacity of 12.8 Tbps upon completion. The fibre company started looking for a new vendor to build the cable after partner Pacnet pulled out of the proposal in April.

Iinet joins government education network operator Research and Education Network New Zealand, which signed a $91 million deal with Pacific Fibre earlier this month.

Last year, the Australian company bought the consumer division of AAPT, Telecom's perennially underperforming unit across the Tasman, for A$60 million.