$445m Hawaiki internet cable sold to Singapore's BW Group
Saturday, 24 July 2021
The only intercontinental internet cable connecting the country that is majority New Zealand-owned is being sold to a Singaporean shipping and infrastructure giant.
Subject to regulatory approvals, Auckland firm Hawaiki Cable will be acquired by a subsidiary of BW Group, which controls 400 ships and also has interests in oil and gas infrastructure and renewable electricity generation.
Hawaiki Cable broke the near monopoly that the Southern Cross Cable Network joint venture previously held on New Zealand’s international connectivity when it completed its $445 million cable connecting New Zealand with Sydney and Oregon in the United States in 2018.
Spark has only a minority 38 per cent shareholding in Southern Cross, which is based in Bermuda and is also partly-owned by Australia’s Telstra, Singapore’s company Verizon and US telco Verizon.
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Hawaiki Cable founder Remi Galasso said he would remain Hawaiki’s chief executive and the company’s entire management team would also stay on.
The sale of the business does not include Galasso and Malcolm Dick’s Datagrid venture, which is planning to build a giant “green” data centre in Southland along with a new subsea cable linking Invercargill to Sydney and Melbourne at a total cost of about $700m.
Galasso said the sale of Hawaiki Cable to BW Group was a positive development for Hawaiki.
“I believe we are going to be able to develop the company and grow from a single subsea cable to a multiple-cable asset,” he said.
Planning for that was underway, he suggested.
“I believe in the coming months we will announce together with BW Group some new development in the subsea cable space.”
It was better for Hawaiki to become a regional operator so it could more easily offer customers connectivity options to additional destinations beyond the US and Australia, he said.
“It is important for us to partner with a financially strong partner and BW Group is exactly what we were looking for.”
Galasso said BW Group did not currently own any submarine communication cables.
But BW Group executive chairman Andreas Sohmen-Pao said the company had “a deep heritage” in maritime connectivity and infrastructure.
“Our strategy is to help connect countries across the oceans while working to reduce our environmental impact, including recent investments into wind installation vessels, floating wind, batteries, solar and other sustainable technologies,” he said in a statement.
“Hawaiki is a great fit and we are pleased to be able to support the team in their next phase of development.”
Galasso would not comment on the sale price, or whether Hawaiki’s shareholders, who also include Dick, the Edgar family, Greg Thomlinson and Australian infrastructure fund Palisade, had made a profit on their original investments in the cable company.
An unusually high proportion of the cost of laying Hawaiki’s cable in 2018 was believed to have been met by pre-selling capacity on the cable and with loans.
The transaction comes as Southern Cross nears completion of its new Next internet cable linking New Zealand and Australia with the US.
That $500m cable, which is due to be service early next year, has now landed in California.
The sale of Hawaiki will require the approval of organisations including the Overseas Investment Office and the US Federal Communications Commission.