June 1, 2011 / 4:40 AM / 6 years ago

Ericsson wins contract worth up to $1.2 billion in Australia

WELLINGTON (Reuters) - Australia's state-owned National Broadband Network awarded a contract to Sweden's Ericsson worth up to A$1.1 billion ($1.2 billion), the latest in a string of contracts to build the A$35.9 billion network.

The contract is to build and operate a wireless network over the next ten years to cover the remote parts of Australia that will not be serviced by fiber-optic cable under the government's plan to provide fast Internet connections to the bulk of Australian homes.

"The mix of technologies we are deploying allows us to offer the most cost-effective rollout of high-speed broadband across our large and sparsely populated continent," NBN Head of Corporate Services Kevin Brown said.

NBN, which last month launched its first site on mainland Australia, has been a key policy of Australia's ruling Labor Party, which came to power in 2007.

The Australian government is in the final stages of negotiating a deal with incumbent phone operator Telstra Corp, over an $11 billion deal to hand over its fixed line phone network to form the core of the NBN.

NBN said it has so far awarded more than 11 contracts with a combined value of up to A$7 billion.

The NBN also said on Wednesday awarded a A$380 million contract for deployment of fiber-optic cable over two years to Silcar, a joint venture between Siemens and Leighton Holdings.

That contract includes the option of another two years at A$740 million.

The network will require total capital expenditure of A$35.9 billion and will need A$40.9 billion in debt and equity. The government plans to put up A$27.5 billion in funding, while the NBN will borrow A$13.4 billion from markets.

Reporting by Adrian Bathgate; Editing by Balazs Koranyi

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