Monday, December 22, 2008

Telstra - excluded from national broadband scheme

Telstra excluded from Australia broadband scheme

Telstra, Australia’s dominant telecommunications group, on Monday reacted with fury after the country’s government excluded it from a plan to build a A$10bn ($6.7bn) nationwide high-speed internet network.

The group was disqualified from the national broadband network (NBN) proposal after the government said it had not included a plan on involving small- and medium-sized enterprises.

Telstra’s exclusion strengthens the chances that the Optus-Terria consortium, which includes Singapore Telecommunications’ Australian unit, will win the NBN contract.

Other bidders include Canada-based Axia NetMedia and Acacia, a locally-based consortium that includes Solomon Lew, the fashion chain businessman and former chairman of food retailer Coles.

Donald McGauchie, Telstra chairman, said the group had “fully complied” with the government’s requirements and a “peripheral” issue had been used to exclude it from the process.

“The Commonwealth could hardly have dreamed up a more trivial reason to exclude Telstra from the NBN,” Mr McGauchie said. “This is a process that seemingly excludes bidders on such trivial and legally questionable technicalities but doesn’t take any action on material issues such as financing and having the technical capability to build the network.”

Analysts said the government’s decision was a blow to Telstra although it was possible the telecoms group could re-enter the NBN plan at a later date.

The telecoms group declined to comment on whether it would mount a legal challenge to the government’s decision and rejected suggestions the board and management had disagreed over submitting a bid. Telstra shares dropped 48 cents, or 11.6 per cent, to A$3.65.

Telstra said it had provided an SME plan to the government in early December. The deadline for bids was November 26.

“Telstra is the only company to have submitted a proposal with a real financial commitment of A$5bn. And Telstra is the only company with the existing network, technical know-how, world-leading vendor, skilled workforce, established wholesale systems and proven track record of building world class networks,” Mr McGauchie said.

The government has promised to make available A$4.7bn in funds to assist the winning bidder build the NBN, which is likely to cost A$10bn or more.

Telstra had earlier threatened not to submit a bid unless the government clarified its position on whether it could force a break-up of the former state-owned group’s operations.

However, the government refused to cave into Telstra’s requests.

Stephen Conroy, minister for broadband technology and the digital economy, said Telstra had failed to comply with one of the five mandatory requirements.

“It would be unfair to the other bidders for us to, after the bids had closed, to re-open them to re-admit one of the bidders who had failed to supply all the information, “ Mr Conroy told reporters in Canberra.

Kevin Rudd, the Labour leader who replaced John Howard as prime minister in 2007, campaigned on a promise to deliver a NBN.

TransAct and the Tasmanian government have also made regional bids to take part in the NBN.

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