South Island set for first direct international internet cable

Southland and Australia look set to be linked by the first international submarine cable to land in New Zealand's South Island, as plans advance for a massive data centre in the region.

Singapore-owned Datagrid New Zealand said it had signed contracts for the supply and installation of the cable with Alcatel Submarine Networks and OMS Group.

The agreement covers a new 2300-kilometre submarine cable between Invercargill and Melbourne, forming part of Datagrid's wider Tasman Ring Network project.

Datagrid's Tasman Ring Network is expected to eventually connect the North and South islands with Sydney and Melbourne, spanning about 6000km.

Datagrid chief executive Rémi Galasso said the connection would be a "game changer" for Southland and the South Island.

"It will unlock the potential of the region, and will allow South Island IT companies, universities and research centres to benefit from better internet with latency improved by up to 45 percent compared with existing routes via the North Island."

The announcement dovetails with Datagrid's proposed hyperscale 280MW data centre at Makarewa, near Invercargill, which is expected to cost between NZ$3.3 billion and NZ$3.5b and become one of the largest data centre developments in New Zealand.

The Southland data centre has already secured resource consents, while the company is separately developing the Tasman Ring international cable network.

The project received a boost last week when Mercury announced it would invest NZ$53 million for a 12.7 percent stake in Datagrid NZ.

Once operational, the data centre would become one of New Zealand's largest electricity users, second only to the Tiwai Point aluminium smelter according to some estimates.

The project has attracted controversy over its expected electricity demand and water use, although Datagrid has argued the facility will support New Zealand's ambitions in artificial intelligence, cloud computing and digital infrastructure.

No details about the cost of the submarine cable, project financing, or when construction work would begin were released.