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Pacific Fibre cable project falls short on required funding
02/08/2012 - Pacific Fibre has shelved plans to build another international cable linking New Zealand's internet infrastructure with the rest of the world after failing to raise the $A382.68 million required.
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It had attracted $US200m in committed sales from five foundation customers, including mobile phone operator Vodafone and Australian internet service provider iiNet.
Vodafone and iiNet shared their disappointment with the project falling over, but say they won't be adversely affected by Pacific Fibre's failure.
"There's no impact at all — we hadn't put any cash on the table," Greg Bader, iiNet chief business officer, told BusinessDesk.
"We're disappointed it didn't get up, especially for New Zealand."
Vodafone said it is "very disappointed that the project hasn't come to fruition" and is "still in favour of a second international cable to help break down the digital divide between New Zealand and the rest of the world".
ASX-listed iiNet extended its capacity supply agreement with Southern Cross Cables last week, though Bader said it was unrelated to Pacific Fibre's collapse as there was always going to be a gap in their capacity needs.
Pacific Fibre's 13,000-kilometre fibre optic cable between Sydney, Auckland and Los Angeles would have competed with the Southern Cross Cable, 55 per cent owned by Telecom, which has the monopoly as New Zealand's only fibre optic connection with the rest of the world.
Pacific Fibre chairman Sam Morgan said the board believed it would be able to attract funding as it was a long-term infrastructure investment.
"We feel like we've done everything we can to succeed and we are all hugely disappointed that we have not managed to get there," he said in a statement.
Paul Brislen, chief executive of lobby group Telecommunications Users Association New Zealand, said he was surprised the New Zealand Superannuation Fund didn't take a stake in the fibre company, given its long-term outlook and potentially steady rate of return.
"This is exactly the kind of project pension funds want to invest in," he said.
"Long-term infrastructure projects are good for New Zealand as a whole."
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