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Optus says yes to broadband stake -

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Optus says yes to broadband stake

The World Today - Thursday, 9 April , 2009 12:26:00

Reporter: Lyndal Curtis

ELEANOR HALL: The Opposition has condemned it as a reckless venture but Optus begs to differ. It's
confirmed that it is looking at options for getting a stake in the Federal Government's new
broadband company.

The director of government and corporate affairs at Optus, Maha Krishnapillai has told chief
political correspondent Lyndal Curtis that Optus is considering offering the Federal Government its
fibre optic network in return for a stake in the new broadband company.

MAHA KRISHNAPILLAI: Oh look yeah, there's a few ways of doing it and we certainly want to see the
details around how that would work. But as we've indicated in our discussions with the Government,
we could really give the Government a head start in terms of using existing infrastructure and then
rolling out to the last mile very quickly in many areas and we think that's a great opportunity for
the Government and obviously for us and the industry.

LYNDAL CURTIS: Would the benefits then of that plan for the Government be that it wouldn't have to
build as much?

MAHA KRISHNAPILLAI: Absolutely. And we'd need to work through all the details of that and how that
might work.

The key we've said all the way through this process is that we do not want any one player, Optus
included, to become a monopoly provider of those services. So we are certainly not saying that we
would control in any way that NBN (national broadband network) company. The Government would have
50 per cent ownership as they've indicated at the moment and no player would have more than 20 per
cent equity in that organisation.

LYNDAL CURTIS: Is it possible to give a ballpark figure on what your existing fibre optic network
is worth and then how much of a stake in the company you may be looking at doing if the swap went
ahead?

MAHA KRISHNAPILLAI: No, look we'd still need to work through how that would all work and we're keen
to understand from the Government what their preferred way of doing this is and how we can
understand those sorts of things so, and it wouldn't be just Optus obviously. There's other players
I'm sure who would be looking for similar sorts of arrangements.

What we would be doing is saying we'll give you a head start in terms of using the fibre. We'll
give you some committed, potentially, some committed customer base so you've actually got, if you
like, the revenue flowing through from day one on this business, in order for us to be integrally
involved in rolling out the next generation network.

LYNDAL CURTIS: Is the current network you have and that other companies have up to the job or would
it itself need to be upgraded to offer speeds of up to 100 megabits per second?

MAHA KRISHNAPILLAI: Well this is a brand new network so we would actually have to design it from
the ground up. And what we would need to work out is what elements of our network would be
appropriate in that network design and which elements we would be looking to be able to use and
which elements we wouldn't.

So it is, it's a brand new network which we know we've got some fibre assets that may be
appropriate. We've certainly got as you're aware satellites and other assets to push broadband out
to 100 per cent of the Australian population and we're looking to work with them on not only fibre
but also satellites and other solutions.

LYNDAL CURTIS: There have been some people, including the Opposition and some analysts saying that
the Government's plan is not financially viable. Do you believe it is?

MAHA KRISHNAPILLAI: Oh look, we've certainly said all the way through that this is such an
important investment for this country to enable productivity growth.

I think the thing that people sometimes forget is that broadband when it gets introduced into
leading countries, and Australia has been an absolute laggard in broadband in world terms, in
leading countries leads to significant GDP growth - 0.2 to 0.4 to 0.5 per cent growth in the
overall economy.

Now why is that? Because businesses become more efficient and productive; because consumers and
others are able to use a much wider array of services.

So any assumptions we make about whether it's commercially viable or not are obviously based on
today's world. We are talking about the world of the next few years. So first of all, assumptions
around usage I think are misplaced.

Second of all, in terms of the actual build of this particular network we need to see obviously
some of the detail around how that would be done but we are confident that it commercially will
stack up because we have already done similar exercises ourselves in our bid through the
Government's RFP (request for proposals).

LYNDAL CURTIS: Has Optus begun talking to the Government about the options yet?

MAHA KRISHNAPILLAI: Oh look it's only very early days. We were very keen to continue some early
discussions from the other day but you know it's very, very early days and we need to see quite a
bit more detail.

I guess the short answer is we are very encouraged that this is a sea-change policy which will
radically reshape the sector and radically reshape the ability for all other companies to be
involved in providing services.

ELEANOR HALL: That's Maha Krishnapillai from Optus speaking to Lyndal Curtis in Canberra.