Telstra buys Pacnet for $919 million

Telstra chief executive David Thodey said the Pacnet acquisition was aligned with Telstra's growth strategy. -- PHOTO:AFP
Telstra chief executive David Thodey said the Pacnet acquisition was aligned with Telstra's growth strategy. -- PHOTO:AFP

Australian telecommunications leader Telstra is buying Singapore- and Hong Kong-headquartered Pacnet for US$697 million (S$919 million).

Pacnet owns data centres throughout Asia, including China, and a 46,000 undersea cable network linking Asia and the United States.

In a statement on Tuesday, Telstra said the acquisition would include interests in Pacnet's China joint venture, PBS, which is licensed to operate a domestic Internet protocol virtual private network and provide data centre services in most major provinces in China.

Pacnet gives Telstra ownership of an extensive range of services, including software defined networking, an expanded data centre network, more submarine cables and major customers across the region, the statement said.

The acquisition is subject to regulatory and Pacnet financier approvals and is expected to be completed by the middle of next year.

Telstra chief executive David Thodey said the acquisition was aligned with Telstra's growth strategy and was a significant step for Telstra as it continued to expand the business beyond Australia.

"Asia is an important part of our growth strategy. We believe this acquisition will help us become a leading provider of enterprise services to multinational companies and carriers in the region," Mr Thodey said.

"The enterprise services market is evolving rapidly and Pacnet will strengthen our networks; data centres and submarine network as well as boosting our service offerings and people capabilities,'' he said.

"Pacnet increases the scale and scope of our assets which can be used as a platform for Telstra to scale and expand leading solutions such as unified cloud, unified communications, managed network services and security services.

"Our strategy is centred on serving enterprise and carrier customers doing business in Asia. We serve these customers by leveraging our strong connectivity foundation to offer a portfolio of integrated network applications and services solutions."

Pacnet chief executive Carl Grivner said: "The addition of Pacnet's subsea fibre network, data centre assets, capability in China, and dedicated employee base to Telstra's world-class infrastructure and management will give it the ability to accelerate business growth in the region.

"There is a tremendous opportunity for this combination to address the growing demand for services throughout the Asia-Pacific region and provide superior solutions and service to customers," he said.

In the year ended December 2013, Pacnet generated revenues of US$472 million and earnings before interest, tax, depreciation and amortisation of US$111 million.