was delighted with its 40 per cent holding in the trans-Pacific cable.

"This is the result of a prudent and considered investment decision made by Optus three years ago. Southern Cross is now the no.1 cable from Australia and New Zealand to the US, increasing previous capacity by a factor of twenty," Mr Hancock said.

"Demand for trans-Pacific capacity has significantly exceeded our original forecasts. The US$1.6bn sales announced by Southern Cross to date comfortably covers all construction and development costs. As has been reported by our Southern Cross partners, the company is now solidly delivering return on investment."

Mr Hancock said that because of the strong performance of Southern Cross, Optus will reap rewards in two ways.

"Firstly, Southern Cross is now delivering substantial returns in the form of an ongoing stream of future dividends and joint venture profits.

"And secondly, since the Southern Cross opening in November 2000, we have significantly expanded state-of-the-art high-bandwidth capacity to service the needs of our growing base of business customers."

In February 2001 Southern Cross announced that sales had exceeded US$1.6bn, compared to initial construction costs of approximately US$1.1bn.

The Optus share of Southern Cross profits is expected to be approximately A$115m, which will be booked in the Optus results for the year ended 31st March 2001, to be announced next month.

After including development costs of other joint ventures (principally Virgin Mobile and Excite@Home), Optus expects to report a positive contribution from associates of approximately $65m for the year to 31st March 2001.

As a result, earnings before abnormals (and after associates) for the year to 31st March 2001 are expected to be approximately 25% higher than the previous year.

Sales revenue and EBITDA growth are expected to be in line with indications from the half yearly results publicised last November.

The Southern Cross dividend will contribute to Optus cashflow in the year ended 31st March 2001. Further on-going and substantial dividend payments are expected to be received in the financial year ending March 2002 and future years, based on Southern Cross continuing its successful marketing program.

Southern Cross has announced plans to upgrade the cable's capacity from 120Gbps to 480Gbps, and hence increase the amount of capacity available for sale.

For more information:
Stephen Woodhill
Cable & Wireless Optus
Tel: +61 2 9342 7850