Australia's Largest Telco Ejected from National Broadband Tender

16 December 2008

SYDNEY: Politics, it seems, played no small part in the Australian government's shock decision to eject the nation's dominant telecommunications company, Telstra, from the bidding for next year's rollout of an A$10 billion ($6.71bn; €4.91bn; £4.39bn) national broadband network.

Having taken office little more than a year ago, the Labour administration's ambitious broadband scheme – designed to reach 98% of the population – is one of its legislative flagships.

But there have been ongoing tensions between the administration led by prime minister John Rudd and Telstra, helmed by its combative chief executive Sol Truijillo.

The latter had demanded a guarantee that the new network would not compete with its existing business - a condition refused by the government.

Telstra responded by submitting a proposal that failed to meet specific tender guidelines – notably the sub-contraction of some elements of the work to small businesses.

At which point the government dumped Telstra from the bidding process, leaving three other consortia to battle it out.

Telstra's exit on Monday set the cat among the pigeons with the telco accusing the government of ejecting it for "trivial reasons".

The company's share price dived 12% at the news.

Data sourced from Sydney Morning Herald; additional content by WARC staff