Leighton's sale of Nextgen stirs telco interest
Telstra has not ruled out bidding for the national fibre optic network. Photo: Nic Walker
TELSTRA has not ruled out bidding for the national fibre-optic network managed by Leighton Holdings' subsidiary Nextgen, which provides the only competition to Telstra's infrastructure in many regional areas.
But the government owns 6000 kilometres of this 18,000-kilometre network and has contractual conditions to prevent Telstra from snapping up assets and reclaiming its monopoly, according to a spokesman for Communications Minister Stephen Conroy.
Goldman Sachs analysts estimate Nextgen could be worth more than $1 billion, based on the price that telco TPG paid for Pipe Networks in 2010. Potential buyers include existing network owners such as Telstra, TPG, AAPT, or a private equity group.
A spokeswoman for TPG chief executive David Teoh said it would not ''comment on potential transactions of this kind''. AAPT was unable to respond before deadline.
But Telstra spokesman Scott Whiffin said "we wouldn't rule anything out if it made commercial sense''.
Leighton subsidiary Nextgen extended its fibre network last year using a $250 million grant from the federal government's Regional Backbone Blackspots Program. This includes a 3000-kilometre link from Brisbane to Darwin, and a 1150-kilometre link from Adelaide to Broken Hill and Shepparton, which Nextgen manages under contract from the government.
A spokesman for Leighton Holdings confirmed it had ''a limited right to access these assets''.
Now Leighton is looking to sell its telecommunications infrastructure assets - including Nextgen, Metronode and Infoplex - if it is offered the right price. Metronode and Infoplex provide cloud computing, data storage and hosting services. The government could, however, step in to ensure Telstra does not gain control of the parts of the network that it owns.
''Under the [blackspots program] agreement, Nextgen was granted an initial five-year right to operate and maintain the network infrastructure on behalf of the Commonwealth. Nextgen also has a limited right of use or lease on some fibres beyond this initial five-year period,'' a spokesman for Senator Conroy said.
''The Commonwealth has standard contractual mechanisms in place to protect its interests in the [program's] assets. There are also contractual mechanisms in place to support the objectives of the [program], which includes improved access to competitively priced backhaul.''
Nextgen earned pre-tax earnings of $125 million in 2010-11 and is expected to make $146 million this financial year.