Project Runway PIPE Networks’ Submarine Cable Project
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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 Australia 2 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 3 “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 Telstra-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 ◆ Sydney 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 4 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 Brisbane, with branch offices in ANZ Investment Bank (ANZIB) is a specialist provider Sydney, Melbourne, Adelaide and Hobart. 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 5 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