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SingTel's broadband bid gathers steam

Katrina Nicholas (Australian Financial Review) | Feb. 9, 2009
Support for SingTel to help build Australia's mooted national broadband network is growing.

SINGAPORE, 9 FEBRUARY 2009 - Support for SingTel to help build Australia's mooted national broadband network is growing, with analysts saying the South-East Asian telecommunications giant certainly has the cash, while other industry watchers have noted it also has the requisite experience.

SingTel, which is based in Singapore and owns Optus in Australia, is one of three parties bidding to be involved in the project, expected to cost upwards of $10 billion.

The other two are Canada's Axia NetMedia and the Acacia Group, backed by a consortium of high-profile business executives, including former Telstra Countrywide boss Doug Campbell.

Axia NetMedia and SingTel have worked together before, last September winning a tender to build Singapore's government-funded next generation broadband network.

That consortium, called OpenNet, plans to roll out fibre to 95 per cent of the city state's homes by 2012, and has won a $S750 million ($744 million) grant from Singapore's Infocomm Development Authority to help it do so.

With Telstra having all but excluded itself from Australia's national broadband project, speculation is mounting that SingTel may team with Axia a second time around.

"Axia only has a market cap of around $C100 million ($122 million) so to think they would be in charge of an infrastructure project of national importance is fanciful," one telco analyst said. Another noted that SingTel, whose reach spans from Bangladesh to Indonesia, would have no trouble footing the bill. The federal government has committed $4.7 billion to the project, but the totaL cost is expected to be much higher.

"SingTel would definitely have the cash - their balance sheet is in superb shape," the analyst said.

However, he added that investing so much money in Australia might not sit well with its broader strategy.

"SingTel's strategy has been all about investing in mobile businesses across emerging markets so putting, say, $5 billion into the fixed-line market in Australia doesn't really gel with that."

The group will release its third- quarter results tomorrow and it is likely it will be quizzed again on its commitment to the broadband build.

Cynics note that SingTel only paid about $13 billion when it bought Optus, then known as Cable & Wireless Optus, back in 2001 and the group is known to be especially frugal with its cash, only giving its subsidiaries money if it is absolutely certain a sound return can be made.

The federal government is expected to announce the winning bidder in late March and there remains a small chance Telstra may re-enter the process. Given Telstra owns the copper network which the fibre build will replace, experts say it is likely to influence the network build no matter what the outcome.


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