Telstra Launches Legal Case Against SingTel Funding

Telstra Corp on Friday launched a legal challenge to an Australian government decision to award rival Singapore Telecommunications A$958 million in funding to provide broadband in remote areas.

SingTel's Optus unit last month secured the funding for its broadband joint venture with Futuris Corp unit Elders which will build new networks to extend broadband coverage to rural and regional areas in Australia.

The decision was a blow for Telstra, the nation's largest telecom, which had hoped to win some of the infrastructure grants.

Telstra said in a statement it had launched legal proceedings in the Federal Court and was seeking orders compelling the government to provide details of how the decision to award the funding to SingTel was made.

Telstra said the SingTel funding would duplicate existing broadband services rather than providing it in under-served areas as stated in the broadband funding program guidelines.

The government funding comprised A$600 million from the previously announced Broadband Connect Infrastructure Program and an additional A$358 million in funding to further extend high-speed affordable broadband services to rural areas.

Under pressure in an election year, the Australian government is expected to set up a review panel soon to examine building a separate, high-speed fibre optic broadband network, which will be put to an open tender.

Australia's existing broadband network is slow compared with other nations, but a stalemate between Telstra and the industry regulator over pricing has delayed plans to build a fibre network.

Optus was not immediately available to comment.