Megaport spins off fibre business

Network virtualisation company Megaport is splitting off its dark fibre assets into a separate business, to be named ‘Superloop’, and is reviewing whether the company should list on the Australian Stock Exchange.

Bevan Slattery.

Megaport, one of several ventures founded by serial internet infrastructure entrepreneur Bevan Slattery, built out fibre networks between major data centres in Australia and more recently has been negotiating to do the same in Singapore and Hong Kong.

Slattery today told iTnews the fibre investment had been required to underpin and “prove out” the Megaport network interconnection model, which allows customers to buy network connectivity between major data centres on a pay-per-use basis.

In Australia, the most cost-effective way to prove the Megaport model was to build fibre links between major ‘campus’ areas of data centres, such as Sydney’s industrial suburb of Alexandria. In Singapore, getting fibre proved difficult and expensive, he said.

“I didn’t want Megaport to be a dark fibre company,” he told iTnews. “The clear goal was to do this at an internet level.”

“Now that the business has traction, I wanted it to be clear about what Megaport is and what it isn’t. It’s important to make that distinction so people aren’t confused about our direction.”

Splitting the company could theoretically help to reduce competitive tensions that would otherwise impede partnerships with telco and data centre operators.

However, Megaport and Superloop will continue to share the same back-office staff employed by Slattery’s ‘Capital B’ investment vehicle, and for the time being Slattery will continue to wholly own both organisations.

Slattery said the move was not about removing any sense of a conflict of interest.

“There is always a potential for that,” he said. “But when you look at Megaport and Superloop - its just not really about Australia. It was always about Asia.

"The number of fibre providers in Australia is well-serviced and rapidly diminishing - TPG has acquired Pipe and AAPT, and Vocus looks to be doing something with Amcom. Its a highly competitive and mature market, I’m happy to leave it and invest in places like Singapore and Hong Kong.”

Expansion plans

The demerger will send both companies in different directions from a geographic point of view.

Superloop expects to have a network of diverse, dark fibre options between Global Switch and Equinix facilities in Sydney and Melbourne, and the national network of NextDC data centres by January 2015.

The company has also secured 150km of duct throughout the city-state of Singapore, from which services are expected to be available by July.

Further expansion for Superloop is likely to require a broader set of investors, Slattery said. He has appointed advisors to study a potential expansion - one option being a possible initial public offer (IPO) on the Australian Stock Exchange.

Success in two years would be “a fully deployed and profitable network in Australia, Singapore and Hong Kong, supported by a diverse customer base of global carriers and content providers,” he said.

For Megaport, Slattery’s ambitions lie further afield. In line with the demerger, he has appointed former Limelight and Microsoft executive, Denver Maddux, as chief executive to lead a global expansion into 25 markets in Asia, Europe and the United States.

Slattery said the Megaport expansion won’t require “anywhere near the CapEx” as if the rollout had been coupled with a dark fibre rollout, and will thus remain a “privately funded vehicle”.

Slattery and Maddux met while the latter was working as vice president of network technology at content delivery network company Limelight.

Maddux told iTnews he was an unabashed “huge fan of Bevan’s desire to shake up the status quo” in internet infrastructure.

“I’ve watched this explosion of activity - from Capital B to Subpartners, to Megaport and now Superloop, and am attracted to his alternative thinking in well established marketplaces,” he said.

Slattery said taking his hands off the reins of Megaport was “made pretty easy when you’ve got a guy like Denver.

“When I looked at where I wanted to take Megaport, I knew it needed complete dedicated 100 percent attention. I want Megaport to be a global player. To get where it needed to be, I thought, I had to get a guy like this," Slattery said.

"Denver is one of the most respected people in our industry. he has built highly scalable platforms, globally. I’ve seen his ascent within the industry. He is very technically talented and a great leader of people - I have tremendous faith in him.”