What closed Sydney Harbour Tunnel last night?

Companies, Investing Education, Technology & Telecommunications, Value.able Roger Montgomery October 11, 2011

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What closed Sydney Harbour Tunnel last night?

Vocus Communications is in the business of selling bandwidth. The company resells it on the cable that runs under the Pacific between Sydney and the US. Last night they laid some of their own under another sea; Sydney Harbour. The company – in which I have previously disclosed I own a small number of shares – sent me these photos of the process. As we have met with management as part of our analysis, we were delighted they remembered our interest in everything they are up to. I thought these photos were fascinating and given its something most of us wouldn’t ever get a glimpse of, I thought you’d be interested too.

There’s no investment merit in the photos so don’t go rushing off to buy shares (certainly not without conducting your own research and after seeking and taking personal, professional advice).

Think of this post as a Value.able photo essay of what some people are up to while you were sleeping.

Meeting point and briefing at the North end of the Tunnel

A closed Sydney Harbour Tunnel

A very empty Sydney Harbour Tunnel

Hauling starts about 900mtrs from the South Exit. It’s a single piece of fibre from end to end

3kms of conduit installed the previous few nights

First meter of fibre coming off the drum

Energy Australia, the RTA and the other carrier’s fibre exiting the tunnel on the South Side

Fibre coming out of the Tunnel on the North side

Posted by Roger Montgomery and his A1 team (courtesy of Vocus Communications), fund managers and creators of the next-generation A1 stock market service, 6 October 2011.

MORE BY Roger INVEST WITH MONTGOMERY

Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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30 Comments

Ron Shamgar
October 12, 2011 at 9:23 pm:

Gee, all that work when you can just broadcast fixed wireless from one single antenna off a building…..but good work boys!
- Roger Montgomery
  October 13, 2011 at 12:41 am:
  
  Thanks Ron.
- Craig B
  October 13, 2011 at 9:29 pm:
  
  Ron,
  
  My ADSL hammers my wireless for speed.
  
  Bring on the cable I say.
  - Ron Shamgar
    October 14, 2011 at 12:09 am:
    
    Who is your wireless provider?
- Brad
  October 14, 2011 at 7:34 am:
  
  Ron, do you need line for sight for big airs technology to be effective? Are there any other limitations?
  
  Sorry if this sounds like a dumb question…….
  - Ron shamgar
    October 16, 2011 at 1:58 pm:
    
    Yes line of sight. That’s why bigair has such high barriers to entry. They secured some of the best CBD locations on an exclusive basis.
- Ray H
  October 14, 2011 at 11:46 pm:
  
  Hi Ron,
  
  You do understand that the antennae that enable wireless broadband are attached to fibre at the bottom don’t you? The network is still optic fibre, it is just the ‘last mile’ that is wireless.
  
  cheers,
  Ray
  - Ron shamgar
    October 16, 2011 at 1:59 pm:
    
    Hi ray. Yes I understand. I was trying to be funny. On a serious note though, there’s no need to stop any traffic to install BGLs infrastructure. Cheers.
Sam B
October 12, 2011 at 8:31 pm:

Minor error in the post that I noticed.

The Atlantic ocean is not between Sydney and the US, it is in fact the Pacific ocean. Perhaps a geography lesson is in order…. hah!
- Roger Montgomery
  October 13, 2011 at 12:42 am:
  
  Bora Bora and Fiji are indeed South Pacific beauties.
Brad
October 12, 2011 at 5:35 pm:

Voc is a bargain
- Roger Montgomery
  October 13, 2011 at 12:42 am:
  
  Not a recommendation of course.
  - Brad
    October 13, 2011 at 6:07 am:
    
    Sorry, just my opinion I should clarified
- Andrew
  October 13, 2011 at 8:24 am:
  
  How so Brad? I am very interested in learning more about these types of companys so i would very interested to hear your thoughts.
  - Brad
    October 13, 2011 at 9:11 pm:
    
    It’s an understandable business;
    Generating high return on equity, utilizing little or no debt;
    A business I expect to grow;
    With a sustainable competitive advantage;
    Run by able and honest managers;
    Trading at a bargain price.
Ray H
October 12, 2011 at 8:01 am:

I hope the ocean between Sydney and San Jose is still the Pacific. If it is the Atlantic, then those tsunamis have been causing more damage then we first thought.

As for redundancy Keat, VOC’s has an IRU to use the Southern Cross cables, which have double redundancy between both continents. Have a look on the VOC website.
Michael
October 11, 2011 at 11:29 pm:

I would be really interested to know what the community thinks of Vocus’ recent submission to the ACCC because I don’t think it’s been discussed here yet. If they are evicted from the cable pits it will be catastrophic for their fibre business which is where their main competitive advantage lies.
- Ron Shamgar
  October 13, 2011 at 7:53 am:
  
  It will never really happen as the legal action it will initiate for loss of business will prevent this. Vocus is probably putting it out there for the record. But, i have been told by industry insiders that in this case fixed wireless is a very good alternative for those locations.
  - Brad
    October 14, 2011 at 7:31 am:
    
    I read the voc accc submission last night. My take is voc is attempting to protect and enhance their position vis a vis their relationship with tls and the n bn .
    
    As an aside, I read an article recently in which voc’s MD talked about his time at soul telecom and how they went through $300mn
    
    Some vc firms in the us won’t invest with start ups unless mgt have had at least 3 or 4 failures.
    
    I’m not saying soul (now tpg?) was a failure but it sounded like a bad experience for voc’s mgt. Lessons learnt and all the better for voc.
Dave T
October 11, 2011 at 11:14 pm:

Cheers Roger,

Thanks for sharing the images, this kind of event certainly doesn’t make the news in Perth.
Michael
October 11, 2011 at 10:54 pm:

Looks like they might need to raise capital to pay for it all. Why do they need more cables? I thought they purchased capacity that would last 15 years.
- Ron Shamgar
  October 13, 2011 at 7:56 am:
  
  Michael, this is the dark fibre they are laying all over the major cities. and theres lots more to go. i think you’re referring to their underwater cable.
Will
October 11, 2011 at 10:19 pm:

Looks like they have got their act together
kev sep
October 11, 2011 at 9:43 pm:

Hi Roger

Cable looks no larger than the cable which lies beside the road between Derby and Broome over the Fitzroy river. Washed away last year, A cow appartently chewed cable earlly 2011 and left Derby / Kununurra with no internet for several days. This post took 5 minutes to load initially so may be technical readers may be able to comment on cable capactity. No financial interest in VOC.
James Griffiths
October 11, 2011 at 7:38 pm:

I am troubled that this post doesn’t seem to actually provide any information, it just seems to discreetly/indirectly promote the stock. You have previously admitted buying this stock for your fund, but you don’t in any way disclose that here.
- Roger Montgomery
  October 11, 2011 at 9:06 pm:
  
  You are right. Most posts are jam packed with information. This is Simply a photo essay of the process. Regarding ownership we’ve disclosed it many times before and you are welcome to alert everyone again. Thank you James. I will make it a policy to ensure it’s disclosed whenever a story about a company is provided.
- Andrew
  October 12, 2011 at 8:11 am:
  
  I think there is information in this post but it may not be obvious. Anything that relates to the operations of the business and understanding more about it is information. it at least opens up soem more questions that you can ask to better understand the company.
  
  I am not interested in this company (at least not yet anyway) as it is not in my circle of competence to come up with my own opinion on the company. But if i was interested, i know would know that there has been extra cable layed and i could start investigating what this means for the company etc.
- sapporosteve
  October 12, 2011 at 8:18 am:
  
  James,
  
  I always thought a picture is worth a thousand words…….
  
  Steve
- Lance
  October 12, 2011 at 11:23 am:
  
  James, read the opening comment regards the pictures and the post will be put in perspective. I always enjoy the continuous flow of information on this blog – whether I decide to purchase the mentioned stock or not; after seeking advice of course.
Keat Lee
October 11, 2011 at 5:17 pm:

I assume there’s geographical (site) redundancy at both Sydney and Hawaii (i.e.no single point failure at Sydney or Hawaii). I will be a bit worried if Vocus Communications only has a single fibre E2E … an outage on that fibre would cost them $/sec.