National backhaul may be next for Chinese investors

Local telcomms industry expects China Telecom-Huawei partnership to enter backhaul market

Local telecommunications industry players expect the China Telecom-Huawei partnership, which intends to build a trans-Tasman cable, will soon become a player in the backhaul market in New Zealand.

China Telecom’s New Zealand subsidiary, Axin, says it is already talking to some of the firms working on New Zealand’s Ultra Fast Broadband. Chairman Robin Lee is quoted by Commsday as saying: "This project fits in very well with our involvement with TNLP on long-distance fibre to Northland and other fibre-design projects. We really want to see New Zealand broadband flourish."

Axin, which initially had a staff of around 14, was previously in a joint venture with Counties Power (please note this article orginally stated that Counties Power was still a shareholder, but that partnership has now finished), providing project management design services and materials, and is a debt funder for the Taitokerau Network in Northland. The company was also part of the unsuccessful Torotoro Waea bid for the Rural Broadband Initiative.

DataLight is the general partner for both Maori entities. Director Roger MacDonald says there is no other arrangement with Axin but he expects them to enter the backhaul market.

That’s also a view held by several other parties involved in the telecommunications industry spoken to by Computerworld, some of whom did not wish to be named.

And there has been further speculation around Telecom, when it splits. It’s been proposed that “new” Telecom, as opposed to Chorus, will make a likely target for overseas investors. China Telecom would certainly have the money.

"That would fit if they want to get into the retail market," says TUANZ chief executive Paul Brislen.

Brislen attended the launch of the Taitokerau Network recently and says that Lee spoke about the similarities between Chinese and Maori culture and said that they were "in it for a generation".

Brislen says China has done "due diligence" on New Zealand. “It bodes well that they will invest further in New Zealand.”

"There’s some thoughts that this could potentially derail Pacific Fibre’s plans [a $US400 million cable linking New Zealand, Australia and the US], but they [Pacific Fibre] tell me their reliance on trans-Tasman is relatively minor because of the way Southern Cross charges. That leg is zero rated and [accounts for] only three percent of Pacific Fibre’s business case.”

Kordia recently put its planned Optikor trans-Tasman cable on hold “until the market improves”.

Axin has teamed with Huawei Marine to build the new $US100 million cable. The funding has been approved by the Export-Import Bank of China. Axin is 51 percent owned by China Telecom.

Robin Lee has been quoted as saying negotiations around the new cable began last June or July but that the firm had been keen to keep a low profile until it was ready to make a significant announcement regarding progress.

He says that with the advent of Australia’s NBN and New Zealand’s UFB, demand for traffic across the Tasman would increase significantly. "We will need to get a lot of information across the Tasman; the old trans-Tasman cables are not really enough for the future of communications," Commsday reports him as saying. "In the next 10 years I think the business will increase by 10 to 20 times."

Much of the desktop design work for the cable had already been completed, with a marine survey expected to take around two months. Construction is expected to begin soon after that, with a projected completion time of 18 months.

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