Telecom's stake in 3G not affected by cost blow-out

Telecom says it shouldn't be affected by any fluctuations in the cost of developing third-generation cellphone technologies, despite concerns its Hong Kong-based 3G partner Hutchison Whampoa may face a cost blow-out of up to $A2 billion.

Telecom says it shouldn't be affected by any fluctuations in the cost of developing third-generation cellphone technologies, despite concerns its Hong Kong-based 3G partner Hutchison Whampoa may face a cost blow-out of up to $A2 billion.

The Australian is reporting claims that subsidiary Hutchison Australia would need closer to $A3 billion to roll out a network and provide handsets, content and applications instead of the budgeted $A1 billion.

"As I understand it we have stipulated how much we are spending and we've locked in that amount," says Telecom national communications manager Linda Sanders.

Telecom's deal, announced in May, will see the company work with Hutchison Whampoa to develop 3G services to be introduced in late 2002 and establish dedicated 3G companies in both Australia and New Zealand operating under a Hutchison brand name, but not the Orange branding that is currently in use worldwide.

Telecom will front up with $A250 million for a 19.9% stake in the Hutchison Australia 3G company and has committed to provide a further $A150 million.

A company statement issued in May says Telecom "will not be called upon for further project equity" and its stake won't be diluted by any further fund raising efforts.

Telecom will have access to Whampoa's "content, products and technologies" for use with its new CDMA cellphone network -- the so-called 2.5G network as well.

Hutchison Whampoa claims to be the largest 3G company in the world with licences covering "over 170 million people", along with agreements with other 3G players such as NTT DoCoMo in Japan.

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Hutchison plays down 3G concerns

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