Wellington, July 28 NZPA - Pacific Fibre -- the company set up earlier this year to build a fibre optic cable between New Zealand, Australia and the United States -- is working on the project with Asian telco Pacnet.

The companies announced they planned to jointly build the 13,600km cable that will land in Sydney, Auckland and Los Angeles.

The estimated cost of the project has fallen to $US400 million ($NZ546 million) from an original $US900m figure.

The companies said they were to begin the process of selecting a vendor to build the new cable shortly and would announce the awarding of the contract in the coming months.

TradeMe founder Sam Morgan, The Warehouse founder Sir Stephen Tindall and Xero founder Rod Drury are among the backers of Pacific Fibre. Other founders include former Vodafone chief marketing officer Mark Rushworth, who is now chief executive.

The companies said that the new cable would be built on a partnership model that allowed Pacnet and Pacific Fibre to each own and operate a fibre pair on the new cable system. They would share responsibility for the cable supply contract as well as operations and maintenance costs.

The model had been proven through a number of successful precedents, the statement said.

Pacnet chief executive Bill Barney said the investment was an integral part of his company's overall strategy to expand its subsea cable infrastructure into the Australasia region, to complement its pan-Asian and trans-Pacific network coverage and boost broadband connectivity into Asia.

"As Australia and New Zealand look towards deploying national broadband networks that will raise broadband penetration and access speeds, this new cable that we are building with Pacific Fibre will deliver the enhanced international connectivity that is essential to support these broadband initiatives," said Mr Barney said.

Mr Barney also told reporters that his company had no plans to bid for AAPT, the Australian subsidiary of New Zealand's Telecom, Reuters reported.

He said the company was waiting for financial markets to recover before carrying out an initial public offer of shares, mostly likely on Nasdaq. The company is currently owned by private equity firms.

Mr Rushworth said having Pacnet as a partner further validated the need for a new cable to Australia and New Zealand, and would ensure the success of the system.

"Pacnet has done this before as the largest investor within Unity cable group, and we are already benefiting from working with them. We are also very happy to announce a further reduction in our estimated system build costs to around $US400m."