Syntheo confirms it will not extend NBN contract

7 Aug 2013

Syntheo, one of the construction partners rolling out infrastructure for Australia’s National Broadband Network (NBN) has reportedly opted not to extend the contract under which it is deploying the fibre network in the two states of South Australia and Western Australia. According to The Australian, an announcement was made by Syntheo – which is a 50/50 joint venture between Service Stream and Lend Lease – last night regarding its decision, which will mean it forgoing more than contract extensions over the next two years that were potentially worth AUD400 million (USD358 million). Meanwhile, the report cites sources close to the JV as claiming that the choice to walk away from the project once the existing contract is up comes amid ongoing problems with the rollout and conditions in the NBN agreements that required Syntheo to take on more risk than it was willing to. As part of the revelation, it has also been confirmed that Lend Lease will take full control of Syntheo and fulfil its remaining NBN obligations; work associated with those existing contracts is expected to be finished early next year, following which Syntheo is expected to be dissolved.

For its part, NBN Co, the public-private company overseeing the construction and management of the NBN, has announced that SA Power Networks will become the prime contractor in South Australia, in addition to Syntheo completing work in progress. Downer EDI, meanwhile, has begun construction in Western Australia, though NBN Co is said to be considering bringing on additional construction capacity in the coming months in both states.

Despite the development, NBN Co Chief Executive Mike Quigley has dispel concerns regarding the fibre network rollout, claiming that the change in contractors is not expected to affect the overall cost of the project or the long-term completion of the build by 2021.

In separate but related news, NBN Co has renewed its construction contract with Silcar for the rollout of fibre optic broadband in New South Wales (NSW), Queensland and the Australian Capital Territory (ACT). Under the twelve-month contact renewal Silcar will continue the construction of the local and distribution network that runs fibre from a local communications exchange (fibre access node or FAN) through each street in a coverage area. In addition, NBN Co has also awarded Downer EDI Limited a two-year contract to roll out fibre optic broadband in an area covering approximately 300,000 premises in Brisbane and Melbourne.

Australia, NBN Co