Telstra buys Asian telecom provider Pacnet

December 23, 2014


Telstra's chief executive David Thodey in Melbourne on August 11, 2011/FILE
Telstra’s chief executive David Thodey in Melbourne on August 11, 2011/FILE
Sydney, Australia, Dec 23 – Cashed-up Australian telecoms giant Telstra said Tuesday it has agreed to buy Pacnet, Asia’s biggest private owner of submarine communication cables, for US$697 million in one of its largest acquisitions to date.

Pacnet, headquartered in Singapore and Hong Kong, also offers data centre services to carriers, governments and multinationals across the Asia-Pacific.

The acquisition, which includes Pacnet’s interests in its China joint venture PBS, is expected to be completed by mid-2015.

Telstra chief executive David Thodey said the move was part of his company’s strategy to expand its business beyond Australia.

“Asia is an important part of our growth strategy. We believe this acquisition will help us become a leading provider of enterprise services to multinational companies and carriers in the region,” he said.

Pacnet gives Telstra ownership of an extensive range of services including software-defined networking, an expanded data centre network, more submarine cables and major customers across the region.

“The enterprise services market is evolving rapidly and Pacnet will strengthen our networks, data centres and submarine network as well as boosting our service offerings and people capabilities,” said Thodey.

“For Australian businesses, businesses across Asia and importantly companies looking to expand and grow in Asia, the combined entity will provide powerful new options for networks and services.”

Telstra has signalled for some time its intention to make technology acquisitions in Asia and has previously formed partnerships, but this is its largest deal to date.

As well as operating a network of 29 interconnected data centres in 17 cities across Asia, Pacnet has the region’s largest privately-owned submarine cable network with a combined length of 46,000 kilometres (29,000 miles).

It also controls two of the five fibre pairs on the Unity trans-Pacific submarine cable network connecting Japan to the United States.

CMC Markets chief market strategist Michael McCarthy said the deal looked positive for Telstra, whose share price ended 0.67 percent lower at Aus$5.96 in a falling market.

“It gets capital working for the company, which is an important aspect from a shareholder’s point of view,” he said.

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