Australia commits $53b to high-speed broadband

The Australian Government yesterday announced plans to invest as much as A$43 billion ($53 billion) over eight years to build a high-speed internet network to connect 90 per cent of the nation's homes and create jobs.

The Government will own at least 51 per cent of a company that will make initial investments of A$4.7 billion to build and operate the network, which will provide internet access 100 times faster than is now available.

Prime Minister Kevin Rudd said the country's largest infrastructure project would help support 200,000 jobs and provide a boost to the faltering economy. The spending comes on top of some A$88 billion announced in the past six months to protect Australia from recession.

"It's time for us to bite the bullet on this," Rudd said, adding that building might begin in June.

"This is a major infrastructure project that will support 25,000 jobs every year over the eight-year life of the project."

Telstra, Australia's biggest phone and internet company, rose nearly 5 per cent after Communications Minister Stephen Conroy said the company would be offered a chance to invest in the network. In December Telstra was excluded from making a bid for the nationwide network because it did not provide a plan for small businesses.

Yesterday, the Government rejected the remaining bids from Terria group, led by Singapore Telecommunications, Canadian-based Axia NetMedia, and Acacia Australia, a group led by former Telstra executive Doug Campbell and Australian businessman Solomon Lew.
"The market sees that Telstra is back in the game," said Ben Potter, Melbourne research analyst at IG Markets. "This offers the opportunity of potentially partnering with the Government. Had one of the other bidders been awarded the contract, Telstra would have been out of the race."

The Government last year called for tenders, saying it would invest A$4.7 billion to help build the network.

Yesterday's total investment is almost 10 times that amount, with the Government prepared to hold at least 51 per cent of the new company and get the rest from private investors and so-called Australian Infrastructure Bonds.

- BLOOMBERG