Hutchison to buy One.Tel network assets


One.Tel collapsed in May last year. Now Hutchison is buying some of its network assets.

SYDNEY, Australia (CNN) -- Hong Kong-controlled Hutchison Telecommunications (Australia) says it will buy most of the network assets built by Lucent Technologies for the failed telco One.Tel.

In a statement to the Australian Stock Exchange after the market closed Tuesday, the company said its subsidiary Hutchison 3G Australia (H3GA) had struck an agreement with Lucent and its associated companies.

Lucent built a $350 million GSM network in five Australian capital cities in 2000 for One.Tel, the telco which collapsed last May with debts of at least $300 million.

The move comes as Hutchison's parent, Hutchison Whampoa, agreed on Monday to take a joint majority stake with Singapore's ST Telemedia in the U.S. communications company Global Crossing, which filed for bankruptcy protection in New York.

Hutchison Telecommunications Australia said Tuesday the Lucent deal did not mean H3GA would operate a GSM network. Instead, the assets would form part of the third-generation network that H3GA is now rolling out.

Out of GSM resale

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Hutchison, which is Australia's fourth-ranked telco behind Telstra, SingTel-Optus and Vodafone, recently quit the GSM resale business to concentrate on its 3G network plans.

It paid about $102 million (A$196 million) last March for 3G licenses in the 2100Mhz band and said in June it would spend about $430 million (A$830 million) to build a 3G network in Australia's five biggest cities: Sydney, Melbourne, Brisbane, Adelaide and Perth.

Hutchison CEO Kevin Russell said the Lucent deal would help its network rollout plans and cut costs.

"It significantly reduces site acquisition and base station construction costs and substantially decreases the execution risks associated with the deployment of our launch network," Russell said in a statement.

Hutchison, which is 58 percent-owned by Hong Kong conglomerate Hutchison Whampoa, will launch 3G services in Sydney, Melbourne and Brisbane in late 2002 or early 2003.

Deal details not disclosed

H3GA will assume the lease liabilities from April 2002 for the One.Tel network site assets, but said this did not involve paying any cash to Lucent. The One.Tel switch site leases are not included in the deal.

Hutchison said other details of the transaction with Lucent were confidential.

One.Tel, whose shareholders include Australia's two biggest media companies, News Ltd and Publishing and Broadcasting Ltd (PBL), collapsed into insolvency on May 29 last year.

It outlayed about $270 million for wireless spectrum in 2000, and also entered into an expensive deal with Lucent to build a GSM mobile network in the five big capital cities.

One.Tel's spectacular failure embarrassed and angered its two high-profile backers, PBL chairman James Packer and News Ltd chairman Lachlan Murdoch, who were both on the One.Tel board. They committed about $460 million to the telco's development and held a combined 41 percent share.

Packer and Murdoch are the sons of Australia's media billionaires, Kerry Packer and Rupert Murdoch.

One.Tel founders Jodee Rich and Bradley Keeling, along with two other One.Tel former executives face civil proceedings by the Australian corporate watchdog, the Australian Securities and Investments Commission (ASIC), over the telco's collapse.

Those proceedings are next listed for February 11.