Vodafone New Zealand, the country's second-biggest internet service provider, has extended its international internet capacity supply contract with ASX-listed Vocus Communications for another two years at a cheaper rate.
Vocus brokers international bandwdith, and is one of the 50% Telecom-owned Southern Cross Cable Network's largest wholesalers.
Sydney-based company, which this month agreed to buy local fibre optic cable network operator FX Networks for $115.8 million, renewed its contract with Vodafone NZ, its largest IP transit customer, with an estimated reduction in annual earnings before interest, tax, depreciation and amortisation of A$4.5 million in the 2015 financial year, it said in a statement to the ASX yesterday. From 2015 no customer will account for more than 5 percent of Vocus's revenue, it said.
"Despite the reduced contribution from Vodafone, Vocus continues to expect very strong Ebitda growth for FY 2015," it said.
The FX acquisition is estimated to have more than doubled Vocus's annual revenue to A$136 million and lifted Ebitda to A$36.7 million in calendar 2013.
Vocus describes itself as the leading independent provider of wholesale and telecommunications services in Australia and New Zealand, providing internet, fibre and ethernet, and data centre services.
Last month the Australian company announced the acquisition of a 10 percent interest in the Sea-Me-We 3 undersea cable linking Perth, Australia, with Singapore from Telecom New Zealand for US$2.3 million.
Shares of Vocus dropped 6.6 percent to A$5.14 yesterday, having soared 47 percent this year.
Vodafone's cheaper cable deal shows the benefits of looming international cable competition.
I'm still struggling to see how Hawaiki Cable will get funding together, but the Tasman Global Access (TGA) cable is a done deal.
A jointed venture betweeen Telecom, Vodafone and Telstra, the TGA will be a new Auckland-Sydney cable. The $US60 million project is fully funded, already has permits in place (by dint of being able piggy back on Southern Cross landing sites). It's due to go live by the end of next year.
The idea is that once bandwidth buyers have used TGA to hop across the Tasman, from Australia they have multiple cable choices up to Asia or the US.
We're already seeing the benefits of Southern Cross price cuts, whether due to looming competition or political pressure, in the form of more and cheaper unlimited data plans.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- The 'Uberisation' of work is driving people to co-operatives
- Nigel Latta only tells half the story on the economy
- While you were sleeping: Oil climbs on OPEC deal
- Warning for Wheeler: Businesses predict dollar to stay higher
- References to Sealegs' technology removed from rival's website as injunction showdown looms
Most listened to
- ASB economist Daniel Snowden: Businesses only see the kiwi dollar dropping by 4% in 12 months
- ‘If you want to go around telling people how they should think, don’t do it with taxpayer money’ – David Seymour on Susan Devoy
- Craigs' Grant Swanepoel on how he expects Z to reconfigure the Z and Caltex brands
- Cameron Officer details the latest motoring news
- 9 Spokes CEO Mark Estall on his company's progress since listing