Ajc Case Study Analysis

Australia Japan Cable – Introduction

Australia Japan Cable (AJC) project, a $520 million submarine telecommunication cable system Hibbard (Telstra‘s managing director) had developed the idea in 1997 and had been working with colleagues on the design, business model, and financing for the past two years. Having decided to use project finance, Hibbard and his team approached the market in early 1999 looking for strategic partners. The August completed in August 1999 confirmed the project‘s technological and commercial viability. The next month, Telstra, Teleglobe and Japan Telecom signed a memorandum of understanding (MOU) to develop the project and arrange the financing.

Demand for broadband capacity was growing in Australia and market forecasters were predicting a capacity shortfall within three years. The need to move quickly in the face of such technological and competitive uncertainty made the tasks of creating a project company an closing a $520 million financing even more daunting.

Outline

• 12,500 km cable from Sydney.

• Australia to Japan via Guam at a cost of $ 520M.

• Key Sponsors: Japan Telecom, Telstra and Teleglobe. Asset life of 15 years.

• Potential Sponsor: AT&T, NTT, MCI WorldCom.

• A Joint feasibility study was carried out for the sponsors.

Current Update of Australia Japan Cable

AJC again participated at the annual PTC conference in Hawaii from 20-23 January 2013.  PTC’13 provided an opportunity for AJC to update its consortium of Shareholders and Customers on performance since the Upgrade adding 40G wavelengths that were brought into service in June 2012.  AJC also met with existing and potential suppliers to review developments with 100G wavelengths for the next Upgrade of AJC.  The timing and technical performance of 100G wavelengths on AJC are considerations included in the ongoing expansion of the original AJC Design Capacity (maximum potential...