Bright network extends Leighton’s reach

A LOW-PROFILE fibre network born out of a failed state government investment has emerged as the backbone of Leighton Holdings Ltd's efforts to extend its national high-speed data network to the Perth marketplace.

In July, Leighton subsidiary Nextgen Networks paid Hong Kong-based Cheung Kong Group $53.5 million for rival operator Silk Telecom, after the parent company decided to exit the telco business and maintain focus on its energy operations.

In late 2006, Silk had taken a presence in Perth by paying $4 million for Bright Telecommunications, a subsidiary of energy network utility Western Power, which had been left with the largely defunct asset after the disaggregated Western Power state electricity monopoly had earlier added cable to some of its networks as a form of diversification.

Bright was known to have networks in the CBD reaching south to about 10,000 homes in South Perth, Como and Victoria Park, with a trial taking place in some of these suburban areas around 2002. Around the same time, it paid $5.1 million for the WA fibre network of Victorian telco Uecomm.

Just how big Bright's network became is difficult to gauge. It was known to have picked up business customers in the CBD but, beyond a small trial, it appeared to do little in the consumer sphere by June 30 2005 when it had decided to write down the assets by $23.1 million and put them up for sale.

For a short period Silk offered retail services, including internet, telephony and television products in WA but decided a year ago to shut down these down, leaving it focused on a small group of large users.

The network that Nextgen has bought is geographically quite extensive; it reaches 36 suburbs in a circle around the CBD that extends as far out as Claremont, Karrinyup, Osborne Park, Ballajura, Guildford, Forrestfield and Murdoch.

Nextgen CEO Phil Sykes said the Perth network, even though it had only has about 40 customers, was the third biggest in the state after Telstra Ltd and Amcom Telecommunications Ltd.

By comparison, Amcom has about 400 fibre customers in Perth, servicing from Joondalup to Rockingham with more than 1,000 kilometres of fibre.

Mr Sykes described the network's customer base as embryonic but said the WA operation was an important part of his company's strategy - offering wide area network services to big data users in the capital cities which it links via its own national cable network.

"The key strategic thing to appreciate is (the previous) Western Power built a network even though it had a consumer focus, the trunkline allows us to get to business areas," Mr Sykes said.

Nextgen plans to increase its sales push to business on or near its network, but is cautious about further investment in the physical infrastructure.

In fact, much of Nextgen's network is built on assets that failed to deliver profits for their original investors - including its national cable which Leighton bought in 2004 for a fraction of the $800 million development cost.

"We'll be prudent in the way we invest," he said. "The first thing is to exploit the network we have and where it could be connected to."