Telstra, Australia’s largest wireless carrier and fixed broadband provider, through Telstra InfraCo, the company’s standalone infrastructure business unit, today announced two distinct investments in its i) national fiber network and ii) ground infrastructure and fiber network to support Viasat, a satellite broadband provider. Specifically, the following two investments by Telstra seek to improve the utilization and scale of its digital infrastructure:

  1. National Fiber Network: expansion of Telstra’s long-haul and regional (inter-city) fiber network in Australia by up to 12.4k route miles (20k route kilometers)
  2. Viasat Partnership: build and manage the ground infrastructure and fiber network in Australia for Viasat, a satellite broadband provider

Collectively, Telstra expects to invest A$1.4bn to A$1.6bn ($999m USD to $1.14bn USD) in incremental capital expenditures over the next 5 years. Of this total commitment, Telstra anticipates investing up to 70% of the capital expenditures, equivalent to A$1.05bn ($749m USD) at the mid-point, over FY23 to FY25. Indeed, this implies an additional A$350m ($250m USD) of annual capex from FY23 to FY25.

Overall, Telstra InfraCo’s investments seek to deliver a mid-teens IRR, reach an annual EBITDA contribution of A$200m ($143m USD) by FY26, and have a payback period of ~9 years.

Telstra’s National Fiber Network Investments in Australia

Telstra intends to scale its fiber network in Australia by building new long-haul and regional (inter-city) fiber routes with dual fiber paths. Particularly, Telstra plans to add new fiber infrastructure, spanning up to 12.4k route miles (20k route kilometers).

These new deployments will increase the capacity and lower the latency of Telstra’s optical fiber network. In turn, Telstra’s new national fiber network will enable transmission rates of up to 650 gigabits per second (Gbps). As a reference point, Telstra notes that this capacity is six times the typical rate of 100 Gbps, which is presently available.

Geographic Connectivity

Telstra’s new national fiber network will facilitate high-speed connectivity between the capital cities of Australia’s states and territories. Concurrently, the fiber network will improve regional connectivity in Australia, such as permitting higher capacity mobile backhaul.

Importantly, Telstra’s fiber network will enable express connectivity between Australia’s capital cities with capacity of up to 55 terabits per second (Tbps), per fiber pair. As a reference point, Telstra notes that this capacity is over six times today’s typical capacity of 8.8 Tbps, per fiber pair, on routes such as:

  • Sydney to Melbourne
  • Sydney to Brisbane
  • Perth to Sydney

By making these investments, Telstra intends to maintain its position as having the largest long-haul (inter-city) fiber network in the country, while improving connectivity in regional Australia.

Timing

Telstra’s new national fiber network project will be built over multiple years starting, at scale, in late FY22 (year ending June 30, 2022). Presently, Telstra is in discussions with anchor customers for the national fiber network. These potential customers include hyperscalers (e.g., cloud service providers) and local telecommunications providers.

Viasat and Telstra – Ground Infrastructure, Fiber

Telstra will build and manage the ground infrastructure (e.g., ground stations) and fiber network in Australia for Viasat, a satellite broadband provider. To this end, Viasat will utilize Telstra InfraCo’s existing infrastructure assets and new build capabilities.

As part of a 16.5-year contract, Telstra will support Viasat’s global constellation of 3 third-generation ViaSat-3 class satellites, which are currently under construction. Specifically, Telstra will colocate Viasat’s satellite access node (SAN) equipment at hundreds of sites across Australia. Additionally, Telstra will build and manage fiber links to each of these sites.

Telstra’s fiber network will connect the SAN sites to multiple redundant data centers that will house Viasat’s core networking equipment. By being connected via fiber and in close proximity to a data center, these sites can quickly connect to the internet or a cloud on-ramp. As such, Telstra’s digital infrastructure is critical for Viasat’s satellites to function, by enabling satellite connectivity to the internet.

ViaSat-3

ViaSat-3 class satellites are Viasat’s third-generation, high-capacity Ka-band satellite. Each of the 3 global ViaSat-3 satellites are able to deliver network capacity of over 1 terabit per second (Tbps).

With this capacity, Viasat provides satellite broadband internet services to fixed, mobile, and government customers globally. This network capacity can deliver data and video streaming speeds of more than 150 megabits per second (Mbps) to end users.

Telstra InfraCo – Fiber, Subsea Cables, Towers

Telstra InfraCo operates 155k miles (250k kilometers) of fiber optic cable, 230k miles (370k kilometers) of ducts, masts, and poles, 10k exchanges, 2 data centers, access to 249k miles (400k kilometers) of subsea cables, and 8.0k towers (including 5.5k+ wireless towers), which are owned by Amplitel.

Jonathan Kim covers Fiber for Dgtl Infra, including Zayo Group, Cogent Communications (NASDAQ: CCOI), Uniti Group (NASDAQ: UNIT), Lumen Technologies (NYSE: LUMN), Frontier Communications (NASDAQ: FYBR), Consolidated Communications (NASDAQ: CNSL), and many more. Within Fiber, Jonathan focuses on the sub-sectors of wholesale / dark fiber, enterprise fiber, fiber-to-the-home (FTTH), fiber-to-the-premises (FTTP), and subsea cables.

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