Syntheo exits NT NBN build

Syntheo will hand construction of the National Broadband Network in the Northern Territory to NBN Co, the company announced this morning.

A statement from NBN Co said the NBN wholesaler “can confirm it will take over the design and construction of the fibre rollout in the Northern Territory".

"Details will be announced in the coming days,” a spokesperson said.

Syntheo is a 50/50 joint venture between Service Stream and Lend Lease. Service Stream had entered a trading halt on Friday until today's announcement.

In February, NBN Co said Syntheo was responsible for delays in the network's rollout. NBN Co's chief executive, Mike Quigley, told a Senate Estimates hearing that the contractor had not connected any fibre serving area modules in Western Australia or the Northern Territory. NBN Co downgraded its construction target of passing some 300,000 premises by June to 286,000 premises.

Syntheo was to be responsible for passing 48,620 of these premises.

In addition to carrying out construction in the Northern Territory, the company is responsible for construction in South Australia and Western Australia.

NBN Co hasn't indicated whether these contracts will be reviewed; a statement issued to the ASX by Service Stream said Syntheo is "committed to working with NBN Co to complete its work in Western Australia and South Australia."

Quigley told the February Senate hearing that there were issues with the rollout in WA and SA, as well as the NT and that NBN Co was "working closely with Syntheo to try and recover their original forecast". The CEO did not explain what the problems were, however. "There are a range of issues," Quigley said. "In projects such as this, where contractors are mobilising, there are a range of issues."

Quigley said that NBN Co's construction partners received some payments in a phased system, and that some payments had already been given to Syntheo.

In its ASX statement, Service Stream advised that Q3 earnings from its fixed communications division, which includes Syntheo, had been "adversely impacted by higher costs and by lower than anticipated volumes.... Whilst a pick-up in volume is expected in the fourth quarter, this segment is anticipated to be marginally loss making for the year."

The company expects to face a cost of around $3 million associated with Syntheo's exit from the NT NBN rollout.

The Coalition's broadband spokesperson, Malcolm Turnbull, recently told parliament that he understood that NBN Co will be shortly announcing a downgraded June target for premises passed by the new network.


Copyright © 2013 IDG Communications, Inc.

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