HAWAIKI SUBMARINE CABLE

OTHER

Asset description

  • Hawaiki is a 15,000 km fibre optic deep sea cable linking Australia, New Zealand, the Pacific and United States
  • Constructed over 27 months, the submarine cable has a design capacity of 43.8 Tbps, equivalent to streaming 1.7 million 4k TV streams simultaneously
  • Equity investment in the Hawaiki entities and its service company
  • Board representation

Investment fundamentals

  • Rapid growth in demand driven by the Internet of Things and growth of content and cloud providers
  • Provides diversity and redundancy in network connectivity
  • Diversification benefits relative to other traditional infrastructure sectors
  • A right to participate in future Hawaiki-led cable investments

Key risks and mitigation

  • Pricing on a per unit of data basis declines with technology improvements and competition, mitigated by strong growth in demand
  • Lumpiness in cash flows due to the sale of Indefeasible Right to Use (IRU) contracts in addition to recurrent leases, mitigated by the investment being structured defensively with upside exposure
  • Equity investment post completion, mitigating construction risks and difficulty of obtaining permits in different jurisdictions, which is a barrier to entry