NBR: Analyst: Pacific Fibre too optimistic about financing

The NBR has published a critical article today – behind their subscription wall – titled “Analyst: Pacific Fibre too optimistic about financing.”

The analyst is Paul Budde, from Australia, who has a consultancy business that advises a host of local telecommunication players.

While the NBR’s headline seemed designed to incite the masses, the actual lead comment from Paul Budde was a lot more positive:

Given the phenomenal growth in international internet traffic, there’s no doubt New Zealand would be in trouble by 2013 without a second cable said Mr Budde, who has previously criticised the incumbent, 50% Telecom-owned Southern Cross Cable as being 10 times or more expensive than fibre connections in the northern hemisphere.

That’s something which we completely agree with.

He went on to say, and I quote again from the article:

“Getting such a project financially of the ground is nothing less than a nightmare and that will be by far the biggest challenge,” said Mr Budde.

“It will totally depend on the reputation, the contacts and the salesmanship of the three entrepreneurs [Drury, Morgan and Tindall] to get this project of the ground

“If they can pull it off by 2013, they deserve a medal. Based on other projects such negotiations could add one or two year to the projects.”

(The article then moves on to showcase work done by Pacific Fibre’s John Humphrey – work he did last year on routes and so forth.)

We absolutely agree that raising funds and making this project happen is a challenging task. The biggest hurdle is the signing up of customers, as it is signed customers that drive the economic model.

We cannot talk much about raising money as it could be inferred as soliciting funds without a prospectus. Suffice to say we need to do a lot of work to be able to present a compelling case to equity and debt investors, and we are committed to doing that work. The feasibility work we have done so far points to a very compelling business case.

We believe we can do it, but we cannot do it alone. We are committed to hiring, retaining and working with the best people and institutions from New Zealand and Australia that we can – motivated people and firms that will drive to make this happen. We have received expressions of interest from a number of individuals and institutions already, and welcome further interest.

Above all we are looking for large customers to sign up to a long term competitive market, in both Australia and New Zealand. By signing up they will make the project viable, and speed the day when we have genuine choice.