Hutchison 3G Australia, has reached agreement with Telstra for joint ownership and operation of 3G radio access network infrastructure.
Telstra chief executive Ziggy Switkowski and Hutchison chief executive Kevin Russell have signed a Heads of Agreement to establish a 50/50 enterprise to jointly own and operate H3GA's existing 3G radio access network and fund future network development.
In return for the 50 per cent ownership of the asset, Telstra will pay Hutchison $450 million, under a fixed payment schedule, in four instalments, starting November 2004.
Under the agreement, the H3GA radio access network will become the core asset of the joint enterprise.
The joint enterprise will open opportunities for new revenues for Telstra and H3GA, stimulate growth in 3G service uptake and provide significant savings in 3G network construction capital expenditure and operating expenses such as site rental and maintenance, the two companies said.
Telstra will launch its 3G services to customers in 2005, utilising the entire H3GA network footprint of more than 2000 base stations covering Sydney, Melbourne, Brisbane, Adelaide and Perth.
Telstra and Hutchison expect to significantly increase the size of the network over the next three years, expanding into Canberra and other regional centres.
Telstra and Hutchison will each continue to own separate core networks, application and service platforms, and will conduct their retail 3G businesses independently and in competition with each other.
The joint enterprise will utilise existing spectrum holdings until licences expire after 2017.