China Telecom provides a loan for the Auckland-Whangarei Submarine Internet Cable Project

Project narrative

In 2011, China Telecom issued a loan to Axin Limited — a joint venture and special purpose vehicle (SPV) — that accounted for approximately half of the funding for the $8.5 million NZD Auckland-Whangarei Submarine Internet Cable Project. Axin Limited (Axin Ltd.), is a SPV of Shanghai Communication Services (a subsidiary of state-owned China Telecom) that was established in 2010. In 2011, New Zealand’s Companies Office listed Axin Ltd. as being half owned by Sino Telecom (NZ) Limited, whose two shareholders were Robin Lee and Fei Ling, both of Mt Eden, Auckland. Counties Power, a New Zealand electric distributor, was a joint venture partner on Axin before dropping out by September 2011. Axin had an exclusive contract to represent Shanghai Communications Services in New Zealand. The purpose of the project was to construct a 200 kilometer, Māori-owned submarine internet cable (fibre-optic network) connecting Auckland and Whangarei, enabling high-speed Internet connections to the region. The network was said to have speeds between 100 megabits per second (1Mbit/s) and 1 gigabit per second (Gibit/s) (1000Mbit/s), no data caps, no core network complexities, point-to-point fibre configurations, private networking capacity, and high fiber count. This was the first iwi-owned long-haul network in New Zealand. The network is owned by Taitokerau Networks, a limited partnership between six iwi (Te Runanga o Whaingaroa, Te Runanga o Ngati Whatua and Te Runanga o Te Rarawa) and Datalight Limited. Taitokerau Networks provided the other half of the financing for this project. New Zealand companies FX Networks and Datalight were the contractors responsible for the design, construction, and sale of the network; specifically, FX Network was in charge of the design, construction, and dark fiber (whole bandwith) sales, while Datalight was the project manager and responsible for the design and construction of layer two (retail or lit fiber) services. China Telecom supplied materials and provided logistical support for the project. Axin also provided materials for the project. China Telecom was not the first choice for sourcing funds for the project. Taitokerau Networks had attempted to garner funding from New Zealand investors, but they had wanted an equity stake in the project, making the project no longer iwi-owned. Te Runanga o Te Rarawa chairman Haami Piripi was quoted by NBR that ‘the irony is not lost on us’ that a Chinese state-owned company provided financing after New Zealand's Finance and Infrastructure Minister Bill English declined to provide New Zealand government funding for the project. Additionally, the project faced some criticism for the fact that the cable ran up the west coast of Tai Tokerau and east of where most of the people and money were, although its supporters argued that the intentions of the project were to connect to the isolated Māori communities in the north and not make a large profit. The project was originally intended to begin implementation in March 2011 and to reach completion five months later (August 2012). Construction began in the middle of September 2011. In December 2011, the project was briefly marred by an alleged ‘procedural glitch’ briefly interrupted project implementation, as a payment from China Telecom failed to reach the accounts of one contractor. Project officials blamed a glitch relating to a shift in payment for payments from Axin to CCS Comservice NZ, a company owned by China Telecom's international arm China Communications Services. After the payment was received, work resumed on the project. As of December 2011, the project had achieved a 70% completion rate. The project was ultimately completed on or around May 10, 2012.