Telstra has entered into talks to acquire Hong Kong-based submarine cable operator Pacnet in a deal that could be worth up to $1.04 billion, reports the Australian Business Review.
In a statement, "Telstra confirms that it is in discussions with the owners of Pacnet around a potential transaction to acquire the company," adding that there is "no certainty that any transaction will take place as a result of these discussions."
Pacnet's owners, including Ashmore Investment Management, Spinnaker Capital and Clearwater Capital Partners, are working with Credit Suisse Group on a sale.
What's driving Telstra's interest in Pacnet is that it could further solidify its position in the Asia-Pacific market to more effectively address the needs of its multinational enterprise customers that are growing their businesses in the region. Today, Pacnet owns over 46,500 km of submarine cables between the U.S. and Asia and nearly 110 global points of presence (PoP).
Over the past year, Telstra has continued to expand its network reach into Asia-Pacific and the U.S.
In January, Telstra enhanced its global MPLS network reach by launching new PoPs in Frankfurt, Paris, Amsterdam and Chicago, a move that addresses its multinational corporation customers' Asia Pacific access needs. Earlier, the service provider increased its data center capacity in both Asia and North America and established a new network-to-network interconnection agreement with CenturyLink (NYSE: CTL).
However, the $1 billion-plus price tag could be a potential hurdle because the service provider said it would spend less than $1 billion in the region, according to the Australian Business Review.
- Australian Business Review has this article (sub. req.)
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