Rural and regional Australia is no closer to getting a faster broadband service, after the government today withdrew funding that was promised to the OPEL consortium under the former Liberal Government.
OPEL Networks, a joint venture between Optus Networks and Elders Telecommunications, which was contracted to build the broadband wimax network at a cost to taxpayers of $958 million, was advised by the Australian Government today that its contract is terminated.
Under the agreement, OPEL was to construct a network that would deliver broadband services to 900,000 households in rural and regional Australia with a faster and cheaper service.
Faster broadband services continues to elude rural Australia after the Government advised yesterday that it considers the conditions of the contract to have not been satisfied and has terminated the funding agreement.
However, in a note to the market, Singapore Telecommunications which owns Optus, said the joint venturers, Optus and Elders maintain that “all conditions precedent to the funding agreement have been satisfied”.
“The OPEL network was capable of meeting the objectives of the Government’s Broadband Connect Infrastructure Program and delivering improved broadband services to 889,322 underserved premises in rural and regional Australia within 2 years at metro-comparable prices,” it said.
OPEL Networks is a joint venture between Optus Networks (a wholly owned subsidiary of Singapore Telecommunications), and Elders Telecommunication (a wholly owned subsidiary of Futuris Corporation).
The contract was launched on 10 September 2007.
For the year ended 31 March 2008, Optus had incurred about $7 million in operating expenses and $9 million capital expenditure relating to the Broadband Connect Infrastructure program.
It advised that in the absence of recoveries from the Government, the capital expenditure of $9 million will be written off in the quarter ended 31 March 2008.
Futuris Corporation (FCL) and Singapore Telecommunications (SGT) are both listed on the Australian Securities Exchange.
Shares in FCL traded in a narrow range for most of the day, ending 1.5 cent down at $1.825, whilst SGT lost 1 cent to $3.14.
