Telstra unveils $1.6 billion digital infrastructure projects

Telstra (ASX: TLS) has today announced a $1.4 to $1.6 billion five-year investment in two nation-building projects aimed at future-proofing Australia’s digital economy by increasing connectivity across Australia.

One project will see the company will build and manage the ground infrastructure and fibre network across Australia for US global communications company Viasat.

The second will see Telstra bolster its optical fibre network by delivering 20,000 km of new state-of-the-art inter-city ultra-high low-latency fibre paths.

“This will support remote working and education needs, health services, high-definition entertainment consumption and online gaming, and IoT use cases such as mining and agriculture,” Telstra CEO Andrew Penn said.

“We’re already seeing connection speeds on the current network surge from 100GB to 400GB and beyond through our investments to date. There is growing demand for greater fibre capacity, enabling massive bandwidth and ultra-fast data rates with lower latency.

“The time for delivering the infrastructure to support this is now.”

The new 20,000 km fibre cables will see transmission and connectivity rates increase by up to six times today’s standard rates (from 100Gbps to 650Gbps in transmission rates and up from 8.8Tbps to 55Tbps in connectivity rates) and enable express connectivity between capital cities like Sydney to Melbourne, Sydney to Brisbane and Sydney to Perth.

Testing for the national fibre network has already started, and the project is set to begin at scale in late FY22.

Telstra will also build and manage three global ViaSat-3 satellites, on behalf of Viasat as part of a 16.5 year contract, which will deliver data and video at increased speeds (more than 150Mbps). This will be the largest-scale satellite solution in Australia's history.

As part of this agreement, Telstra will build and manage high-speed fibre links to Viasat’s satellite access node (SAN) equipment across the country.  

The network will connect the SAN sites to multiple redundant data centres to house the core networking equipment needed to manage the expected increase in data traffic.

“Telstra is a trusted, well-respected organisation with impressive infrastructure assets in Asia and an extensive fibre network,” the president of Viasat’s space and commercial networks, Dave Ryan, said.

“By leveraging their existing infrastructure for our ground network, we can cost-effectively optimise our satellite assets and significantly lower our risk of deployment and operations for the ViaSat-3 terabit-class satellite system.”

The investments will be through Telstra’s infrastructure arm Telstra InfraCo and are outside of its business-as-usual capital expenditure.

Telstra InfraCo is accountable for 250,000 kilometres of fibre optic cable, 370,000 kilometres of ducts, masts and poles, 10,000 exchanges, two data centres, and access to 400,000 kilometres of subsea cables and 8,000 mobile towers (now owned by Amplitel after a $2.8 billion deal in September 2021).

The telecommunications company expects cashflow to remain ahead of accounting earnings, while capital expenditure (including this investment) is forecast to be $250 million per annum lower than adjusted depreciation and amortisation.

Shares in Telstra (ASX: TLS) increased by 1.02 per cent in early morning trading, as per 11.40 AEST.