Vocus is investing $500 million in a major new fibre network linking Sydney and Melbourne, marking one of the biggest infrastructure projects in the Australian telecommunications sector as demand for artificial intelligence and data centres continues to accelerate.

The company, Australia’s second-largest fibre network operator, has unveiled the first stage of its Australian Digital Infrastructure Platform (ADIP), a long-haul fibre route designed to significantly expand data capacity between the nation’s two largest cities. Construction is expected to create around 1,000 jobs, with the network scheduled to be operational by 2029.

The project represents the first major strategic initiative under chief executive Andres Irlando, who joined Vocus in mid-2025. According to the company, extensive analysis of Australia’s digital infrastructure market showed that demand for fibre capacity is expected to outpace supply over the coming decade, particularly as AI applications become more widespread.

Unlike conventional underground fibre installations, the new route will use ducted infrastructure, allowing additional fibre cables to be installed inside protective conduits as demand grows. The design also provides greater protection against accidental cable damage and simplifies future network expansion.

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When complete, the Sydney-to-Melbourne connection will support up to 3,456 fibre pairs, a dramatic increase compared with existing long-haul routes. Vocus estimates there are currently fewer than 200 fibre pairs operating between the two cities, with around 40 per cent of Australia’s data traffic travelling along the corridor.

The company believes the new network will provide roughly 15 times the capacity currently available across existing infrastructure, positioning it to meet rapidly increasing demand from hyperscale data centres and cloud computing providers.

The investment also intensifies competition with Telstra, whose InfraCo division has traditionally dominated Australia’s long-distance fibre infrastructure. As AI workloads expand, telecommunications providers are increasingly focusing on enterprise customers, including global technology companies operating large-scale cloud platforms and data centres.

Vocus has not announced any customers for the project but said the new route has been designed in response to strong market demand. Rapid expansion by Australian data centre operators such as AirTrunk, NextDC and CDC has highlighted the growing need for high-capacity fibre links to support AI processing and cloud services.

The announcement follows Vocus’ $5.2 billion acquisition of TPG Telecom’s fibre assets last year, further strengthening its national infrastructure footprint.

Although the company has reported financial losses in recent years, its shareholders, led by Macquarie Asset Management and Aware Super, continue to back long-term investment in digital infrastructure. Vocus says its focus remains on expanding capacity to support Australia’s growing demand for connectivity as AI, cloud computing and digital services reshape the telecommunications landscape.