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NextGen says network on target
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australian telecom wholesaler NextGen says its ambitious 8,400 kilometer (5,200 mile) fiber-optic network will be finished in the first quarter of 2003, despite speculation its financial future is under a cloud. The A$820 million ($450 million) NextGen project linking Australia's five largest cities involves some of the biggest names in telecom infrastructure, including equipment maker Lucent Technologies and network builder Leighton Contractors. Other backers include the investment banks Macquarie Bank, Deutsche Bank and UBS Warburg. The project has a 60-40 equity-debt ratio. NextGen chief operating officer Stephe Wilks said this week that 90 percent of the national network is complete. A NextGen spokeswoman told CNN Friday that the first leg, between the key cities of Sydney and Melbourne, was already running traffic and "ready for customers." Second stage in JanuaryShe said the second stages, between Sydney-Brisbane and Melbourne-Adelaide, would be ready in January, with the final Adelaide-Perth stage due for completion in the first three months of next year. The spokeswoman said that the company wasn't prepared to name its customers. NextGen's fiber-optic network competes with incumbent carriers such as Telstra and Optus for national, high-capacity transmission services. There has been speculation in the past week that NextGen's financial future is in doubt and that by mid-2003 it will have exhausted the $450 million in financing secured for the project in December 2000. In August, Leighton Holdings, the parent of Leighton Contractors, said it had booked a A$45 million ($25 million) writedown on its investment in NextGen. It took a 20 percent equity stake worth A$90 million ($50 million) in December 2000. The other main equity partners, Macquarie Bank, Deutsche Bank and UBS Warburg, hold 10 to 13 percent each, with the remainder held by investment funds. A spokesman for Leighton Holdings told CNN late Friday that negotiations between the different stakeholders were continuing. "We are trying to move the project forward," he said. Financial pressuresLeighton's subsidiary Visionstream built the network at a cost of A$612 million ($336 million) and has a 10-year contract worth about A$50 million ($27.5 million) a year to operate and maintain the network. The NextGen spokeswoman said that like all other telecoms, the company faced financial pressures, but it was "not running out of money." The company's other big backer, Lucent Technologies, provided the fiber-optic technology and will also help maintain and operate the network. Like Leighton, it has also committed to support NextGen financially. Lucent has already had one unhappy experience with the Australian telecommunications scene. In 2000, it built a $350 million mobile phone network in Sydney, Melbourne, Brisbane, Adelaide and Perth for One.Tel, the junior telecom that collapsed in May 2001. In January this year, Hong Kong-controlled Hutchison Telecommunications (Australia) said it would buy most of the network assets that Lucent built for One.Tel. Hutchison said then it would pay no cash up front. Instead, its third-general mobile joint venture with Telecom New Zealand will acquire the lease liabilities of the One.Tel network from April 2002 onwards.
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