Telstra to buy Pacnet for $857m

Telstra will spend US$697 million (A$857 million) to acquire cable operator and telecommunications provider Pacnet and gain access to Asia's largest privately-owned submarine cable network.

Australia's largest telco last week confirmed it was in discussions with the Asian company over potential acquisition, which would include Pacnet's 46,500km of submarine cable between the US and Asia.

The purchase is subject to certain completion adjustments as well as regulatory and Pacnet financier approvals, and is expected to close mid next year.

The acquisition includes interest in Pacnet's China joint venture, PBS, which provides data centre services in most major Chinese provinces.

It will also provide Telstra with Pacnet's extensive submarine cable network, 29 data centres and 109 points of presence, software-defined networking business and 2400 enterprise customers and 220 retail and wholesale partners.

Telstra has in recent years signalled its desire to expand out of Australia and into Asia.

The telco expects its global enterprise and services division in Asia would almost double in size as a result of the acquisition and become the leader in the Asian service provider market.

In a statement today Telstra CEO David Thodey said the Pacnet acquisition would help propel Telstra's growth in the region.

“For Australian businesses, businesses across Asia and importantly companies looking to expand and grow in Asia, the combined entity will provide powerful new options for networks and services," Thodey 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."

Pacnet CEO Carl Grivner said the addition of Pacnet to Telstra's portfolio would help the business grow in Asia and meet an increasing demand for services.

In the 12 months to December 2013, Pacnet reported revenue of US$472 million and EBITDA of US$111 million.

Headquartered in Singapore and Hong Kong, Pacnet boasts around 815 employees across 25 offices in 11 countries and regions.