Project Runway PIPE Networks’ Submarine Cable Project

Expression Of Interest Project Runway PIPE Networks’ Submarine Cable Project

Expression Of Interest

“We are working towards a vision that will forever revolutionise the Australian telecommunications industry.” Bevan Slattery, CEO/Managing Director

PIPE Networks Limited ABN 21 099 104 122 The Problem International Bandwidth Cost to



Despite Australia’s boom in Australia’s international transmission capacity needs broadband, and the higher demand are currently serviced by two primary and one secondary cable systems. Southern Cross Cables and for international transmission the Australia Japan Cable are considered primary capacity, there has been little systems utilising a more direct route to provide lower movement in terms of the unit cost of latency connectivity to the key US networks. transmission. SEA-ME-WE-3 provides connectivity to the west of Australia (Perth) via Singapore, however due to Whilst there are a number of contributing factors, the the cost and performance issues associated with Australian Competition and Consumer Commission transcontinental capacity, this capacity is seen as less (ACCC) and the telecommunications industry in desirable, particularly for connectivity between the general accept the main cause is due to a lack of east coast of Australia (where 80% of the country’s competitive tension amongst existing capacity population is based) and the United States (where providers. The ACCC believes that significant over 80% of Australia’s international internet traffic is competition concerns remain in a number of sourced). sectors, especially broadband and that the progress Without an alternate competitive cable, Australia risks of competition in telecommunications markets losing its status as a progressive information economy. is slowing. The emergence of a new entrant into the international transmission market is expected to significantly reduce unit transmission costs for “While planning extensive new investment in Australian carriers and consumers. Australia, NTT Communications Asia Pacific CEO, Tetsuro Mikami, told CommsDay that the The majority of providers understand the need for comparatively high cost of international bandwidth competition in transmission capacity to and from could stymie the market as a whole. Australia. Already we have seen a number of Australia’s largest hosting operations move off-shore in a bid to He says that multinational companies are already reduce the costs associated with hosting and globally starting to relocate data facilities from Australia and interconnecting bandwidth intensive infrastructure in that regional headquarters could follow.” Australia. Graham Lynch Commsday, 2 February, 2007

Project Runway The Solution Project Runway



“This is not a capacity issue, it is a competition The cable will be a 2-fibre pair system with either issue... Even if two or three cables do come in they 64x10Gbps or 96x10Gbps wavelengths per pair will still be owned by the same three or four people. (depending on vendor selection), providing a total potential capacity of up to 1.92Tbps. Current The only way there will be a significant shift in expectations indicate between 120Gbps and pricing is if a party who is outside the current 200Gbps of capacity will be lit upon completion, duopoly installs a cable. with additional capacity being available as customer Any carrier who understands the situation requirements demand. in Australia realises that our cable will be the The focus of Project Runway is to provide major last chance for three to five years of getting a bandwidth users access to competitive capacity to competitive cable into Australia. then use and/or resell to corporate, government and While Southern cross and AJC [The -owned carrier clients. Australia Japan Cable] might offer some sweeteners As such, PIPE International will only be offering either on pricing my belief is that those will be short-lived STM16 or STM64 clear channel Indefeasible Rights until competition is stifled.” of Use (IRU) capacity to all Expression Of Interest Bevan Slattery (EOI) respondents. This decision will ensure effective CEO PIPE Networks, The Exchange, 16 February, 2007 wholesale opportunities for capacity purchasers and allow providers to supply sub rate services (E1 to Project Runway is the operational name given to PIPE STM4) to the Australian marketplace. Internationals’ submarine cable project connecting Australia to Guam. Service offering will be:

The cable system spans over 6,000km and will initially ◆ to Guam link Australia directly to Guam providing international ◆ Sydney to Japan carriers and operators a new and competitive ◆ Sydney to USA opportunity to interconnect other systems to Australia. Pricing protection, by way of additional capacity credit offerings, will be made available to customers committed as part of the EOI, to ensure IRU investments are protected.

Expression Of Interest The Team The Foundation of Project Runway



PIPE Networks Limited and ANZ provides banking services to PIPE Networks and PIPE International (Australia) Pty Ltd has demonstrated the quality of this relationship banking philosophy. PIPE Networks is a public listed company (ASX: PWK), headquartered in , with branch offices in ANZ Investment Bank (ANZIB) is a specialist provider Sydney, , and . of investment banking products, including advisory and financial services. ANZIB has a strong portfolio PIPE International (Australia) Pty Ltd is a wholly owned of specialist businesses providing services across the subsidiary of PIPE Networks and is the Project Runway strategic advisory, debt – equity spectrum, including vehicle. advice on debt, hybrid and equity capital raisings. PIPE Networks provides network infrastructure ANZIB advise throughout the whole transaction solutions for Australian clients, and has three lines process from initial strategic advice through to of business: The Company builds and operates one investor communications on completion, and have of Australia’s most extensive metropolitan fibre significant experience in complex major transactions optic networks offering clients in Sydney, Brisbane, across a broad range of industry sectors. Melbourne, Adelaide, Hobart and Perth access to the company’s ‘Dark Fibre’ service. With a team of 25 corporate finance advisory specialists, ANZIB has extensive experience in cross PIPE Networks also drives the nation’s largest Internet border and domestic transactions in and between Exchange, with a network across six capital cities Australia, New Zealand, Asia (including China), serving some of the country’s largest content and Europe and the USA. This global ‘one team’ structure internet service providers. distinguishes ANZIB Mergers & Acquisitions from In addition, PIPE Networks’ clients trust in the most of its competitors, and facilitates cross border company’s ability to provide secure sites for their IT collaboration and seamless delivery of services. ANZIB equipment, giving them more options for primary, will mobilise its advisory team anywhere in the world backup or disaster recovery sites. As a young, agile to their clients’ advantage. company, PIPE Networks is able to foresee and quickly ANZ Investment Bank has been engaged to act as respond to client needs. financial adviser and provide assistance in identifying Please refer to the PIPE Networks Commitments and and implementing the debt and equity structure Capability Statement for further information. of the project. ANZIB has committed considerable resources towards Project Runway, and has significant ANZ Investment Bank interest and experience in submarine and other cable ANZ is one of the world’s top 30 banks and is systems, including AJC, Southern Cross and IP1. After headquartered in Melbourne, Australia and has been reviewing recent project successes, the board of PIPE providing services to Australasia since 1835. Today Networks has recognised ANZ as the most capable it has offices in Australia, New Zealand Asia, Europe, advisory partner. UK, USA and the Pacific with assets of UA D293 billion, employs more than 30,000 people and serves more Clayton Utz than 5 million customers. Clayton Utz is one of Australia’s most successful law firms. With over 1700 employees nationally and ANZ is a relationship bank as well as a transaction a reputation for being entrepreneurial and fresh- bank – ANZ is able to draw on the expertise and thinking, the firm is acknowledged as a leading legal market judgment of the extensive range of product practice in the Asia Pacific region. capabilities within the ANZ Group.

Project Runway 

Clayton Utz have worked with various parties VSNL has a global presence including operations in on previous cable systems and have a deep India, the United States, The United Arab Emirates, understanding of the special considerations needed Canada, the United Kingdom, South Africa, Singapore for such a project. Clayton Utz assigns a dedicated and Sri Lanka. team of experts with in-depth knowledge of specific VSNL is listed on the major stock exchanges in India industries and specific businesses to each assignment. and its American Depository Shares are listed on the Clayton Utz are legal advisors to the project, New York Stock Exchange. providing expert guidance on the legal, taxation and VSNL Singapore Pte Ltd is a subsidiary of VSNL and international operational structures of the project as provides expertise in submarine cable systems as well as assistance with international and domestic well as access to critical infrastructure and onward contract negotiations. connectivity from the planned Guam landing station IWCS for this project. VSNL also brings an established Established in 1999, International Wire and Cable international customer base to leverage new Symposium (IWCS) is an independent consulting sales opportunities for fibre capacity and a wealth firm servicing the submarine cable market. IWCS has of intellectual property in the construction and comprehensive engineering and technical capabilities operation of submarine cable systems. combined with extensive experience in fibre optic EGS technologies, undersea cable construction and EGS (Asia) Ltd is a leading international group of installation, as well as network design and project companies whose head office, EGS is based in Hong management. Kong and has offices in the United Kingdom, Australia IWCS has been engaged as a specialist independent and through out South East Asia. EGS provides consultant to assist with the cable network design global specialist multi-disciplinary support to the and vendor selection. IWCS is working closely with civil engineering, construction, telecommunications, the project team providing additional expert technical power, maritime, hydrocarbon and mining industries. consulting advice and project management skills to EGS offers a diverse array of specialist surveying ensure the timely and cost effective completion of the and consultancy services based on an innovative project. approach to problem solving. The EGS Group, in VSNL International association with its alliance partners, offers a global Videsh Sanchar Nigam Limited (VSNL), a part of turnkey solution to a diverse array of clients. the Tata Group, is the leading provider of public EGS has gained considerable worldwide experience in international telecommunications services. VSNL the design, initiation, execution and interpretation of a has become a global major in wholesale voice and wide range of geophysical, hydrographic, topographic, carriage of international long distance minutes. They oceanographic and environmental studies in both the have acquired ownership of submarine cable systems marine and terrestrial environment. EGS has vast first- including the Tyco Global Network and access to hand experience with over 2000 individual projects teleport antennae and transponder capacity servicing being carried out since its inception in 1974. the Atlantic, Pacific and Indian oceans.

Expression Of Interest Support Network Monitoring and System Maintenance



Network Monitoring will be outsourced to the PIPE Networks’ Network Operations Center.

Typical functions include: ◆ Active Network surveillance on a 24/7 basis ◆ Fault management / Customer trouble resolution ◆ Network Event notifications (planned or otherwise) ◆ Customer enquiry ◆ Planned works management ◆ Configuration management ◆ Capacity Activations ◆ Change management (e.g. software/hardware upgrades, record keeping) ◆ Network Management and Operational Support system administration

The maintenance and fault-fixing works will be carried out through maintenance agreements with recognised cable ship providers using cable ships based in the Asia-Pacific region.

Project Runway 

Expression Of Interest Timeline Key Project Dates



Event Dates Distribution of EOI document 23 March 2007 EOI open for submissions 23 March 2007 Private data information sessions - Australia 26 March 2007 - 13 April 2007 EOI submission due 20 April 2007 EOI evaluation and negotiations 26 March 2007 - 28 April 2007 Finalise IRU contracts 16 April 2007 - 5 May 2007 Official decision on submarine cable build 11 May 2007 Award supplier contracts 18 May 2007 10% IRU deposit required 30 May 2007 Ready for Service (RFS) date Q4 2008 Remaining 90% IRU payment 14 days after RFS date/handover

Respondents seeking to attend a private data information session are strongly encouraged to arrange a time as soon as possible.

Please Note: Some content on this page is not available for public release.

Project Runway Contact Details Key Contact Information



The following personnel are the key contact points for Submissions: further information or clarification. All EOI/quote requests are to be received before Thursday 20 April 2007 at 5pm (AEST) by one of the Principal Contact: following methods: Bevan Slattery Managing Director/Chief Executive Officer Postal Submissions PIPE International Pty Ltd PIPE Networks EOI +61 7 3233 9800 PIPE Networks Limited Level 17, PIPE Networks House Secondary Contact: 127 Creek Street Andrew Gardiner Brisbane QLD 4000 Business Development Manager - Australia International Carriers Email Submissions PIPE Networks Limited [email protected] +61 7 3233 9832 All submissions will be handled in strict confidence. Email: After close of submissions, you will be notified and All email must be addressed to negotiations will start pending signing of mutual non- [email protected] disclosure and confidentiality agreements by both parties. Please include the contact details of an officer of the company authorised to engage in such negotiations in your submission.

Expression Of Interest Fact Sheet PIPE Networks’ Submarine Cable System

10 PIPE International Cable Capacity Level 17, PIPE Networks House 127 Creek Street Design Brisbane QLD 4000 2008 Capacity Australia Total Fibre Pairs 2 2 Phone +61 7 3233 9824 Pairs per Fibre Pair Wavelength (Gbps) 20 96 Fax +61 7 3233 9880 Fibre Wavelengths Gbps per Capacity 10 10 Web www.pipenetworks.com Total Capacity (Gbps) 200 1920 Contacts Bevan Slattery, Managing Director/CEO Bandwidth Products [email protected] Wavelengths Andrew Gardiner, BDM International Carriers 2.5 Gbps Wavelength [email protected] 10 Gbps Wavelength SDH/SONET Owners STM-16/OC-48 * PIPE International (Australia) Pty Ltd STM-64/OC-192 * (a wholly owned subsidiary of PIPE Networks Limited) Ethernet Comments Gigabit Ethernet * * The PIPE International Cable will be the nation’s first to 10 Gbps Ethernet offer POP to POP handover, overcoming the need for Purchase Options expensive backhaul to selected locations. Leases * Connecting Australia to Guam and providing onward ◆ Leases (over 3 years) * connectivity to Asia and the United States, the PIPE ◆ Convertible Leases International Cable offers diversity to the few existing routes, and provides competitive pricing for greater Indefeasible Rights Of Use capacity. ◆ IRUs Ready for Service Date Backhaul Colocation Q4 2008 Available at major POPs Cable Length A variety of handoff points for the cable will be Approximately 6400 km available. As Australia’s first POP to POP cable, we aim to have a presence in the POPs listed below. These will Service Offering be built following customer demand.

Service offering will be: ◆ Equinix, San Jose

◆ ◆ Sydney to Guam PAIX, Palo Alto ◆ ◆ Sydney to Japan ONE Wilshire, Los Angeles ◆ ◆ Sydney to USA Global Switch, Sydney ◆ Equinix, Sydney ◆ VSNL Japan

* Not available on pre-commit.

Project Runway “We are very focused and we know our goals, but what makes this company truly great is our ability to reach them.” Bevan Slattery, CEO/Managing Director

Phone: +61 7 3233 9800 Facsimile: +61 7 3233 9880

Web: www.pipenetworks.com Email: [email protected]