There’s war out there in the fibre-optic trenches. FX Networks chief executive Murray Jurgeleit says he’s been told by existing and potential customers that Telecom and TelstraClear are spreading FUD (fear, uncertaintly and doubt), suggesting FX is financially shaky.
“Things couldn’t be further from the truth,” Jurgeleit says. “We’ve broken even this year on EBITDA – six months earlier than planned — and a recent valuation of the company shows that the investments of the original shareholders have increased six-fold in value.
“Compare that with the performance of the others. I’m really bullish. Our revenues for the March 2007 year were $8 million, which will more than double to March 2008 based on existing contracts. I’m expecting revenues of more than $20 million for the year.”
A Telecom Wholesale spokeswoman says FX Networks is a wholesale customer and “it’s not the kind of thing we’d do”.
TelstraClear spokesman Chris Mirams says the company’s focus is on finding and providing solutions to meet customer needs.
“We compete on quality of service and the growth TelstraClear is experiencing across all sectors of our business is evidence the market is responding accordingly,” Mirams says.
Last week, FX Networks lit up its recently laid fibre link to Tauranga. It’s the first step in completing an east coast link in the North Island. The company has a 35-year lease from OnTrack on four fibres linking Auckland and Hamilton, then Palmerston North and Wellington. The link from Hamilton to Palmerston North was completed in October 2006 after FX laid its own fibre, by the roading network, over 440km.
As back-up, it leases a diverse path from another provider it declined to name.
Early last year, the company extended its reach from Wellington to Upper Hutt. This year’s programme of work will link Rotorua, Taupo, Napier-Hastings and Masterton, completing an east coast route. “We plan to go to Christchurch by March 2009,” Jurgeleit says.
Later, the company will lay additional fibre paralleling the OnTrack lease-link to provide greater diversity.
“That rented capacity runs out of grunt this year,” Jurgeleit says.
FX Networks’ investment in laying fibre will eventually total $53 million, Jurgeleit says. This is being funded by a combination of shareholder loans, releasing equity and selling fibre to major customers.
The regional links are largely being driven by large customers — Police is an example — wanting fibre to their branches. That said, there are no immediate plans to service areas such as Whangarei and New Plymouth.
The company, whose Auckland-Wellington backbone is used for the Government Shared Network, currently has 25 customers using that backbone. Jurgeleit says that number will double this year. FX Networks also has 140 customers using its high-speed ISP service.