Home > Overseas Investment News > Chinese Bankroll Maori Fibre-optic Plans in New Zealand
Chinese Bankroll Maori Fibre-optic Plans in New Zealand
2011-09-06
Brief:Chinese cash will help bankroll an $8.5 million Maori-owned fibre-optic network connecting Auckland and Whangarei in New Zealand.
Chinese cash will help bankroll an $8.5 million Maori-owned fibre-optic network connecting Auckland and Whangarei.

The 165-kilometre "Northern Network" broadband link could be the first of many instances where Chinese finance and expertise is used to help fibre-up New Zealand, one of the project's backers says.

The company behind the venture - Taitokerau Networks - is backed by three Northland iwi, Te Rarawa, Ngati Whatua and Whaingaroa. Wellington's Datalight has partnered with the iwi and will manage the network.

Internet service providers will be able to buy capacity on the link, which will compete with TelstraClear and Telecom's own cables connecting the two centres.

Datalight director Roger MacDonald said roughly half the funding for the network had come from China through Axin NZ, which had been contracted to oversee the network's construction - due to begin shortly.

The finance was debt funding rather than equity investment, and the remaining funding for the network, to be built by Wellington's FX Networks, would come from Taitokerau Networks.

The deal was not about China "trying to find out information from New Zealand. It's about building a trusted relationship for long-term projects."

Taitokerau Networks had sought funding from New Zealand investors but they had wanted an equity stake in the network, rather than leaving total ownership with iwi.

It expected to repay the debt in four years and reinvest revenues from the network in more wireless and fibre links in the north and to achieve its social objectives.

Axin had an exclusive contract to represent Shanghai Communications Services - which specialised in network design and project management - in New Zealand.

The Chinese company was seeking to invest and diversify outside China and had set up an office in Auckland, MacDonald said.

"In Asia-Pacific they are offering project management expertise and design expertise. They can rapidly design networks for construction."

The company was interested in supporting the ultrafast and rural broadband rollouts, and was "in dialogue with a number of business entities to offer its services", he said.

MacDonald said Shanghai Communications Services had backed the bid by Maori consortium Torotoro Waea to win the contract to roll out the Government's $285m rural broadband initiative. The bid had offered to debt-finance the entire cost of the scheme.

"But I don't think [the Government] had the stomach for that kind of approach."

Ad Feedback   Further projects that could draw on Chinese funding and expertise could include fibre rollouts in the lower North Island by Torotoro Waea, which has bought a majority stake in Wellington council-backed broadband firm Smartlinx3.

FX Networks managing director Murray Jurgeleit said the company was pleased the Government had commissioned the ultrafast broadband build.

"We were neutral whether it was Telecom or anyone else. What we want is good, cheap urban fibre to get from our exchanges to customers' premises."

There would be opportunity for FX Networks and urban and rural broadband builders to collaborate in rolling out fibre "on routes of mutual interest", Jurgeleit said.

The Northern Network was one of several projects it had on the go.

It was planning a fibre build from Bulls through Whanganui to New Plymouth, and was considering a joint fibre build with Chorus on the east coast around Gisborne.

MacDonald said Maori were eager to invest in telecommunications infrastructure to "preserve the unique identity of Maori as a people in New Zealand", and their Chinese backers had strong empathy with their aims.

"[Maori] are not just investing for investing's sake but for a social outcome."

Telecommunications networks would improve education and productivity for Maori and other communities and create jobs for them, particularly in the technology sector, he said.

BusinessDay
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