Telstra, Hutchison ink US$450m 3G network sharing deal

Telstra has struck a US$450 million deal with Hutchison 3G Australia to jointly own and operate the latter's existing 3G radio access network and fund further development.

Telstra said today that the agreement marked Australia's first 3G network sharing to expand and accelerate accessibility of advanced mobile services. Hutchison owns and operates the only 3G network in Australia thus far.

Hutchison and Telstra have signed a Heads of Agreement to establish the 50/50 joint effort, with Telstra paying Hutchison a total US$450 million in four instalments starting from November.

Ziggy Switkowski, CEO at Telstra, said the partnership would allow Telstra to enter the 3G market and improve opportunities for wireless services and mobile communications in Australia.

"In light of announcements by SingTel Optus and Vodafone that they intend to build their own 3G networks, this agreement recognises that the interests of the industry and the nation are best served through this type of infrastructure sharing arrangement," Switkowski said in a statement.

The deal should also prove convenient for Telstra. The deal would have no impact on Telstra's capital management program announced 21 June, Switkowski said.

Kevin Russell, CEO of Hutchison in Australia, said the deal made "compelling commercial sense" for both companies.

"This agreement with Australia's biggest mobile network operator validates the quality and cost of the 3G network infrastructure built by [Hutchison] 3," Russell said.

The deal would improve 3's chances of delivering new and better mobile products and services for 3G, Russell said.

Both companies would continue to offer competing products and services to customers, such as multimedia content, advanced multimedia messaging, high speed music and video streaming, video telephone services, mapping and directory services, and advanced business applications.

New 3G handsets were expected from Telstra and Hutchison from 2005, the companies said.