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Sunday, November 28, 2004 6:48:11 PM
By Fleur Leyden
November 29, 2004
http://www.smh.com.au/news/Breaking/Telstra-verges-on-1bn-3G-pick/2004/11/28/1101577353643.html?onec...
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Phone companies jostling for Telstra's soon-to-be decided $1 billion third generation network tender are offering 'free' handsets.
Telstra is close to finalising a tender, worth up to $1 billion, for third generation network (3G) equipment and the expansion of Hutchison's 3G network.
Sources close to the bidding vendors said an upgrade of Telstra's "core" network, including installing the software platform and applications needed for 3G, will be part of the tender.
Expenses for servicing the network for three to four years, and an outlay for 3G handsets, is also part of the tender.
Telstra spokesman Michael Grealy said a tender process was under way but he would not comment on its size.
Phones companies including Ericsson, NEC, Siemens and Nokia are believed to be bidding aggressively for the tender, with some believed to be including "free" handsets as a sweetener.
In August, Telstra paid $450 million for 50 per cent of Hutchison's 3G network, built by Ericsson. Telstra said it would spend $150 million upgrading the network.
Telstra's domestic capital expenditure will increase from $2.9 billion in 2003-04 to $3.2 billion this year.
Earlier this month, Optus and Vodafone said they would spend a combined $1 billion on their 3G networks. That includes spending an estimated $700 million on building a joint radio access network for 2000 3G base stations as well as the duo each spending $100-$150 million to build separate core networks.
Nokia has been selected to provide the core network and radio access networks for Optus and Vodafone.
Meanwhile, Telstra is struggling to cope with its GSM digital network, with sources close to the telco concerned it has reached full capacity in metropolitan areas, resulting in slower call connection times and frequent drop-outs. Fixing the problem will cost an estimated $80-$100 million.
Instead, Telstra is making prepaid CDMA offers in a bid to migrate customers from digital to its CDMA network.
However, Mr Grealy said the reason for making the CDMA offers was purely competitive and he denied that Telstra's digital network was overloaded.
"The GSM network remains a very high quality network with 6.5 million customers on it . . . the GSM network is operating very well," Mr Grealy said.
Two months ago, Telstra said it had connected its one millionth mobile customer to its CDMA network.
David Moffatt, Telstra group managing director, consumer and marketing, said most of that growth had come from metropolitan areas.
Telstra shares ended 4 ¢ higher at $4.85 on Friday.
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