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Australia cancels broadband deal
2008-04-02
The Australian government has terminated a 958 million Australian dollar ($869 million) agreement with a Singapore-backed consortium to build a rural broadband network, officials said Wednesday. The termination of the OPEL network funding is likely make an upcoming tender for the government's planned fiber-to-the-node network even more competitive. OPEL partners Futuris Corp. and Singapore Telecommunications Ltd. said in statements to the Australian Securities Exchange that the government on Tuesday had "advised that it considers the conditions have not been satisfied and has terminated the funding agreement." Confirming the termination, Communications Minister Stephen Conroy said the agreement was canceled because OPEL was unable to meet a commitment to provide broadband coverage to 90 percent of underserved rural areas. A detailed analysis showed the network would "cover only 72 percent of identified underserved premises," Conroy said in a statement. The OPEL partners said they maintained that all conditions for the funding agreement had been satisfied, and that the OPEL network was capable of meeting the objectives of the government's broadband network plans. Futuris and Singapore Telecommunications, equal partners in OPEL, were awarded the contract by the former government of Prime Minister John Howard, which was ousted at elections in November last year. New Prime Minister Kevin Rudd has promised to provide 98 percent of Australian homes with high-speed Internet services in the next five years. It has pledged up to 4.7 billion Australian dollars ($4.3 billion) of government funds to build an open access network in a public-private partnership. The new government is hoping to attract proposals from a number of companies, including Telstra, Australia's biggest telecommunications company, and SingTel for its planned network. The OPEL partners aid that if they were unable to recover money from the government for terminating the contract, Futuris would make a provision of 15 million Australian dollars ($13.6 million) as a nonrecurring item, and Singapore Telecommunications' Australian subsidiary Optus will write off 9 million Australian dollars ($8 million).
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