Hutchison spends up on 3G network

Hutchison hopes to roll out its 3G mobile network by late 2002-early 2003

By CNN's Geoff Hiscock, Asia business editor

SYDNEY, Australia (CNN) -- Fourth-ranked telco Hutchison Telecommunications Australia will spend $430 million (A$830 million) to build a third-generation mobile network in five key cities.

Hutchison said Tuesday it had signed a contract with Swedish equipment supplier Ericsson to supply the 3G network for Australia's five biggest cities: Sydney, Melbourne, Brisbane, Adelaide and Perth.

Hutchison, which paid $102 million (A$196 million) in March for 3G licenses in the 2100MHz spectrum band, is Australia's fourth mobile phone operator behind Telstra, Optus and Vodafone.

Shares in Hutchison, which is 58 percent-owned by Hong Kong conglomerate Hutchison Whampoa, jumped on news of the contract, closing 23 percent up at 31.5 Australian cents, a gain of 6 cents.

Third-generation technology offers the promise of faster Internet access, CD-quality sound and streaming video for mobile phone users.

Target date for rollout is late 2002

In a statement to the Australian Stock Exchange Tuesday morning, Hutchison said the network would be rolled out commercially at the end of 2002 and early 2003.

This puts it in a race with Optus, which has previously said it hoped to have Australia's first 3G network operating by the end of 2002.

Hutchison will operate the network in an alliance with Telecom New Zealand. The two companies are putting in more than $500 million into the business, to be known as Hutchison 3G Australia.

Telecom NZ will put in about $130 million for a 20 percent stake, while Hutchison will contribute network infrastructure and its 1800MHZ spectrum.

Uses Orange brand name in Australia

Hutchison, which uses the Orange brand name in Australia, paid about $350 million in March 2000 for the1800MHz spectrum in the same five cities. It is using this in conjunction with the 2100MHZ spectrum it bought in March this year.

The agreement with Ericsson covers the supply of a wideband CDMA (code division multiple access) network, and IP core network and transmission technology.

The base network design will use 2100MHz spectrum technology. Hutchison said Ericsson had also committed to working with it on the future delivery of 1800MHz capability in network infrastructure and dual-mode terminals.

Ericsson will bring in Motorola Australia to provide the radio access network for the Sydney and Brisbane license areas.