OPTUS ANNOUNCES BOLD EXPANSION OF ITS 3G MOBILE NETWORK ACROSS NATIONAL FOOTPRINT

Optus announced today plans to build a new third generation mobile communications network with a wide national footprint - far beyond its existing 3G network - with services to commence by early 2008.

"Optus is taking a bold step to bring competitive third generation mobile communications technology to the vast majority of Australians," Mr Paul O'Sullivan, Optus Chief Executive said.

The new network will reach 96 percent of the population, replicating the coverage of Optus' existing national 2G mobile network which covers over 650,000 square kilometres of Australia's landmass.
Optus' move signals a new era of competition in 3G services nationally.

It means that people living anywhere in this extended footprint will be able to receive high speed mobile data services delivered over the Optus 3G network - and have a choice of carriers for third generation mobile.

"The incumbent thought that it could lock up regional Australia under a 3G monopoly. But Optus continues to build its business on bringing competition and improved products and services to customers," Mr O'Sullivan said.

"Today, competition in rural and regional Australia is weak, with the incumbent having substantial excess market share.¹ With the investment Optus is announcing today, we are well positioned to grow share in non-metropolitan Australia.

"History shows that when we focus on a new market, with new offers and real alternatives for customers, we can achieve our natural market share.

"Today Optus' customers are using our 3G network to enjoy improved data speeds, better content and innovative applications such as video calling and video download," Mr O’Sullivan said.

Optus has introduced innovative applications like MyZooNow and Google search which use 3Gs higher bandwidth to make the mobile handset a powerful tool to help our customers live their lives – at work and play.

Today's announcement means that these innovative services which offer all the richness of high bandwidth communications in a fully mobile package, will be available across a wide national footprint.

In addition, the new 3G network is designed to allow a natural upgrade path through the installation of additional software to enable High Speed Downlink Packet Access (HSDPA). Once installed, this will allow network peak broadband speeds of up to 3.6 megabits per second initially, with the potential to rise up to 14.4 megabits per second.

The new network will be built and owned by Optus exclusively.

In a further boost to competition, Optus expects to sell capacity on the network to mobile resellers, as it has consistently done on its existing mobile network.

Optus will continue to co-own its existing 2100MHz 3G network in metropolitan Australia, in a joint venture with Vodafone.

Mr O'Sullivan said that construction of the new network would begin as soon as possible with the first phase addressing large regional centres including Newcastle, Bendigo, Ballarat and Wollongong.

The new network will operate in the 2100MHz frequency range, with Optus exploring the possibility of using the 900MHz frequency range to address smaller regional centres as well as rural and remote locations.

This possibility is attractive because at the lower (900MHz) frequency range, radio signals have a greater range – giving better quality coverage across sparsely populated rural and remote areas.

Optus has been trialling 3G at 900MHz for some months, with encouraging results.

Mr O'Sullivan said that Optus would reach a final decision on frequency choice for the second phase of the rollout later in 2007.

"The cost of the network rollout is estimated at up to $800 million if it is built entirely at 2100MHz, and around $500 million if 900MHz proved feasible. This would be funded out of Optus' normal annual capex program over the three year build period.

"This is an important day for competition in mobile telecommunications – not just in the cities, but across many areas of Australia which have been denied choice for far too long," Mr O'Sullivan said.

¹ While the incumbent's national market share is 44 percent, Optus estimates that the incumbent's non-metropolitan share is over ten percentage points higher. Optus national market share is 33 percent. (Information based on Roy Morgan single source October 2005 to September 2006.)

Optus expands 3G mobile network across wide national footprint (pdf format, 772 kb)

Media contact:
Melissa Favero
Optus Corporate Affairs
Tel: (02) 9342 5030