Telstra Expands Subsea Network with Pacnet Acquisition

Telstra announced it would acquire Asian telecommunications and service provider Pacnet Limited, a provider of connectivity, managed services and data centre services to carriers, multinational corporations and governments in the Asia-Pacific region.

The acquisition of the Singapore and Hong Kong headquartered Pacnet includes interests in its China joint venture, PBS, which is licensed to operate a domestic Internet Protocol Virtual Private Network and provide data centre services in most major provinces in China.

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 US$697 million acquisition is subject to completion adjustments. The transaction is subject to regulator and Pacnet financier approvals and is expected to complete by mid-2015. Telstra Chief Executive Officer, David Thodey said the acquisition was aligned to Telstra’s growth strategy and was a significant step for Telstra as it continued to expand the 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,” David Thodey said.

“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.

“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.

“Pacnet increases the scale and scope of our assets which can be used as a platform for Telstra to scale and expand leading solutions such as unified cloud, unified communications, managed network services and security services.

“Our strategy is centred on serving enterprise and carrier customers doing business in Asia. We serve these customers by leveraging our strong connectivity foundation to offer a portfolio of integrated network applications and services solutions,” he said.

Pacnet Chief Executive Officer Carl Grivner said: “The addition of Pacnet’s subsea fibre network, data centre assets, capability in China, and dedicated employee base to Telstra’s world-class infrastructure and management will give it the ability to accelerate business growth in the region.

“There is a tremendous opportunity for this combination to address the growing demand for services throughout the Asia-Pacific region and provide superior solutions and service to customers,” he said.

In the year ended December 2013 Pacnet generated revenues of US$472m and earnings before interest, tax, depreciation and amortisation (EBITDA) of US$111m. The combined entity would become a leader in the Asia service provider market. Telstra’s GES business in Asia would almost double in size and it is expected to drive operational and cost synergies, the company wrote in a press release.

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