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Update Telecom NZ out of Aus broadband team - 18-October-2008, 14:20

Telecom NZ out of Aus broadband team

Problems at Terria, the SingTel/Optus-led consortium bidding to build Australias national broadband network, have intensified, with the withdrawal of key member, Telecom NZs AAPT.

Along with the news, reported here yesterday, that the consortium does not have its funding sorted out, AAPTs exit is a major blow. Bids need to be finalised by November 26.

AAPT chief executive Paul Broad said in a statement: The decision to cease our involvement in Terria is timely for us, given the current position of the bidding process. AAPT can now be an independent voice in the process, he added.

But Terria chairman Michael Egan said that the bid would be unaffected by AAPTs decision. AAPT's owner, Telecom NZ, is undertaking major capital investment in New Zealand and I can understand it wanting to focus on its home turf,'' he added.

AAPT had always maintained it would not put any money into the network, but was committed to buying access on the network once it was built. That is the stance taken by all the remaining members bar Optus, which will partially fund the build should Terria win, perhaps A$2 billion of the A$10 billion A$15 billion needed.

There are seven remaining members of the consortium: Optus, Primus, Soul, iiNet, Internode, Macquarie Telecom and TransACT.

But as the second-most important member of the consortium, AAPTs withdrawal casts doubt on the credibility of Terria. Rival bidder Telstra jumped at the chance to further criticise the consortium yet again.

Telstra Public Policy and Communications Group Managing Director David Quilty said: "It's pretty obvious from recent comments that Terria is falling apart at the seams -they have admitted not being able to secure financing and now one of its most important members has pulled out stating it never intended to provide financial support.

"It's a bit like watching an Agatha Christie movie - and then there were seven," he added.

AAPTs Broad had pointedly mentioned the war of words between Terria and Telstra over the bidding, implying the arguments between the two groups were irrelevant.

"We believe the conversation must distinguish between two key issues. Firstly, who is best placed to build the network and secondly, a commitment to ensuring the correct regulatory model is in place to encourage competition on the network. The ownership of the network is of secondary importance, Broad said.

But consultancy Ovum called AAPTs move a Plan B in case of a Telstra win.
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