Terria Estimates Australia Broadband Network Could Cost A$12 Billion

SYDNEY -(Dow Jones)- The Terria consortium believes that the high-speed broadband network it is vying to build in Australia could cost up to A$12 billion to construct, a spokesman for Singapore Telecommunications's Optus unit said Thursday.

The Australian government has pledged up to A$4.7 billion to help fund a public-private high speed broadband network which will reach at least 98% of Australia's population.

It has set up a panel to consider bids from potential builders, with Telstra, Australia's largest telecommunications group, also a likely bidder.

Previously, the Optus-led Terria consortium had estimated the network would cost A$8 billion-A$10 billion.

"We've done more work on it, and the A$8 billion-A$10 billion was for the core fiber component. There is additional IT and infrastructure costs," Maha Krishnapillai, Optus director for government and corporate affairs, told Dow Jones Newswires.

"A lot of it comes down to assumptions," he said.

Krishnapillai said Terria is waiting for information from Telstra on its existing network, which will allow it to finalize numbers.

The Australian Competition and Consumer Commission should set the rate of return on a broadband network, and "along with most other utility-style networks, that return would be around 12%," he added.

Telstra Chief Executive Solomon Trujillo has said Telstra estimates the network could cost up A$25 billion to build. Telstra has indicated it wants returns of around 18%.

SingTel will invest up to A$2 billion in equity in the network if Terria's bid is successful, Krishnapillai said, with the remainder likely to be debt-funded.

-By Lyndal McFarland, Dow Jones Newswires; 61-2-8235-2957; lyndal.mcfarland@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 17th July 2008