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
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