Leighton Announces the Formation of Vytel - A New Telecommunications Company

Leighton Contractors Pty Limited today announced that a new wholly owned company, Vytel Pty Limited, will be based in Melbourne and will consolidate its extensive telecommunications interests.

Leighton Contractors Managing Director, Mr Bob Merkenhof said that telecommunications has become a major part of Leighton Contractors operations.

“The establishment of a focused provider of services and infrastructure to the industry is part of a strategic plan to grow and diversify our business,” he said.

“Over the past 10 years, Leighton Contractors has turned over approximately $2 billion from telecommunications activity and has significant design, construction, installation, and operation and maintenance capabilities. Last year, revenue from telecommunications was over $250 million.

“The recent acquisition of a specialist contractor in the wireless end of the market, the launch of our second major optic fibre cable development last week and a joint venture with Leighton Asia, has brought together a unique group of assets, companies and projects.

“Our strategy is to continue to look for acquisitions which will grow our ability to offer total solutions for clients.

“Through Vytel, our aim is to increase the size of our telecommunications business to at least $500 million per annum,” said Mr Merkenhof.

Mr Phil Cooper, Managing Director of Vytel, said that Vytel will be a unique provider of services and infrastructure to the telecommunications industries in Australia and Asia.

“Vytel will be the first multi-disciplined service provider in Australia’s telecommunications market offering both cable and wireless expertise as well as project development and investment capabilities,” said Mr Cooper.

“The recent acquisition of LSE Technology Pty Limited brings to Vytel a track record in wireless, microwave radio and mobile telephone network projects. This is an important and strategic step. There is an increasing focus on wireless applications as a means of bridging the expensive last mile of installation to the customer and providing remote access to the Internet.

“Vytel will operate through three contracting arms – Visionstream, LSE and Vytel Asia – and have a separate investment division to manage our shareholdings in new businesses such as Nextgen and Reef Networks.

“The joint venture with Leighton Asia is an exciting opportunity for Vytel. We believe that the combination of our Australian experience in telecommunications and Leighton Asia’s local presence and contracting knowledge will provide us with an excellent base for pursuing work in emerging regional markets.

“Based in Hong Kong, Vytel Asia is targeting opportunities in that market as well as in the Philippines, Malaysia, Indonesia and Taiwan,” said Mr Cooper.

ENDS

For more information contact:
Annie Luczka
Corporate Affairs Manager
Leighton Contractors Pty Limited
Tel: (02) 9925 6675
Mobile: 0413 316 948

Corporate Profile - Vytel
Vytel is a unique provider of services and infrastructure to the telecommunications industry in Australia and Asia.

Vytel Pty Limited will consolidate Leighton Contractors telecommunications assets, companies and projects into a single, focused entity.

Vytel offers carriers a total skills base to outsource and rollout communications infrastructure and technologies including project development and investment, design and construction, and operation and maintenance services. Vytel is an investor in two of Australia’s newest and largest privatised telecommunications projects, Reef Networks and Nextgen Networks.

The structure of Vytel includes two Australian contracting arms, Visionstream and LSE, bringing together cable and wireless capabilities. Vytel is also entering the Asian telecommunications markets through the formation of a venture with Leighton Asia.

Structure Chart view pdf (0.1 Mb) >

The provision of telecommunications services and infrastructure is a rapidly growing business. This growth is anticipated to continue over the next few years as new entrants, and the adoption of new technologies, fuel activity. Vytel plans to expand its telecommunications capabilities and target large-scale telecommunications infrastructure developments. Vytel is well positioned to take a leading position in facilitating the development of infrastructure by injecting equity as a project sponsor.

In the past year, Leighton Contractors has gained about $250 million in revenue from telecommunications work and Vytel is expected to have revenues well in excess of that figure in 2000/01. Vytel aims to continue to anticipate and meet the changing demands of the telecommunications sector.

Operating Companies
Visionstream Pty Ltd
Visionstream is a pre-eminent supplier of cable network design, construction and maintenance services for the Australian telecommunications industry.

Leighton Contractors strengthened its expertise in telecommunications with the acquisition of Visionstream Pty Ltd from Telstra in 1996. Visionstream designed and rolled out the broadband networks which carry Foxtel cable TV programs and enable high speed Internet access for Telstra customers. The network has been rolled out to 2.5 million homes.

Visionstream’s technical capabilities have also enabled it to design and build customer access networks (CAN) for Telstra. At the moment, these networks mainly carry basic telephone services for Telstra’s customers, but they are soon expected to become the means by which Telstra customers can have access to high speed Internet services.

Visionstream is rolling out Reef Networks, an 1800 kilometre optic fibre cable network between Brisbane and Cairns. Visionstream has a $60 million construction contract with Reef and a further 10 year operation and maintenance contract worth around $30 million. Construction has commenced and will be completed by April 2001.

This experience and capability in rolling out networks will be used to build the recently announced transcontinental Nextgen Networks project. The construction works will be worth $600 million to Visionstream and will be followed by an operation, maintenance and network upgrade contract worth $250 million over the next five years. Construction is expected to start in early 2001 and be completed by early 2003. With its significant geographic coverage through its engineering resources and workforce, Visionstream will provide day-to-day field support to the operating network.

LSE Technology Pty Ltd
LSE is a telecommunications and broadcasting networks contracting company with a track record in wireless, microwave radio and mobile telephone network projects.

Leighton Contractors recently acquired 100% of the shares in LSE Technology Pty Limited. LSE provides a complementary skill base to Visionstream and will allow Vytel to position itself as a "systems integrator" and capture further telecommunications opportunities as a full service provider.

The telecommunications market is currently seeing a focus on wireless applications as a means of bridging the expensive last mile of installation to the customer. Other developments in the wireless area include more sophisticated mobile telephony and remote access to the Internet.

LSE has capabilities in cellular telephone networks, roadway and rail tunnel communications, train despatching radio systems, satellite communications, broadcasting and microwave radio systems. LSE installed and tested antenna feeder systems for over 1000 Vodafone sites and installed the AM/FM radio rebroadcast systems in the Melbourne City Link tunnel, the Perth Northern Bypass tunnel and the Sydney Eastern Distributor tunnel.

LSE currently installs 50% of Optus' mobile base station equipment and is undertaking projects including Optus’ GSM coverage for Olympic Venues in Sydney, Vodafone’s GSM rollout, OneTel’s GSM1800 rollout and the Orange CDMA rollout.

LSE continues to carry out work related to transport infrastructure including ongoing maintenance for the M4 and M5 communications systems in Sydney, installation of a radio rebroadcast system for the M5 East tunnel and a government radio network (GRN) expansion for the Eastern Suburbs Railway in Sydney.

Offshore, LSE has surveyed, designed, installed and commissioned an extensive telecommunications system in Java for the State Railways of Indonesia, spanning some 2,500km. LSE is currently supplying satellite facilities for Chevron in Port Moresby, New Guinea and installing a satellite facility in the Cocos Islands.

Vytel Asia
Vytel Asia, a 50:50 venture with Leighton Asia, will provide services and infrastructure to the emerging telecommunications market in Asia.

Based in Hong Kong, Vytel Asia will replicate Vytel’s range of services in Asia, leveraging its experience and expertise from Australia with Leighton Asia’s 25 year presence in the region.

It will pursue the development of telecommunications infrastructure as well as provide design, construction, installation, operation and maintenance services. Asia’s massive population is generating substantial growth opportunities. Targeted markets include Hong Kong, the Philippines, Malaysia, Indonesia and Taiwan.

Vytel Asia will second resources from Australia and build on the important relationships it has with major equipment and technology vendors. Leighton Asia’s local presence and contracting knowledge in the areas of building, civil infrastructure and marine and foundation engineering will be an invaluable asset. Leighton Asia has over $1.2 billion of work in hand and has operations in Hong Kong, the Philippines, Malaysia, Indonesia, Thailand and Indochina.

Vytel Investments
Nextgen Networks Pty Ltd
Nextgen Networks, a business venture between Vytel and Macquarie Bank, is an 8400 km national optic fibre network extending from Brisbane to Perth via Sydney, Canberra, Melbourne and Adelaide.

Funding for Nextgen will be approximately 60% debt and 40% equity. The debt has been underwritten by Deutsche Bank and will be syndicated to a group of local and overseas banks. Macquarie Bank, Nextgen’s financial adviser, is well advanced with the placement of equity to local and overseas institutions. Leighton, through Vytel, will take a sponsor equity stake in the project of at least $50 million.

Nextgen, will be Australia’s first true independent, wholesale high bandwidth network owner and operator. Lucent Technologies will provide the next generation of optic fibre technology, introduced for the first time into Australia, and supply operations and maintenance support once the network has been completed.

The network will provide cost competitive, high quality bandwidth services on a regional, inter-capital and international basis. The target market for this service includes licensed telecommunications carriers, Internet Service Providers, international carriers who land submarine cables in Perth and Sydney, and large companies and government users who require dedicated networks between capital cities.

Nextgen will develop the network using Non-Zero Dispersion Shifted Fibre (NZDSF) along with Dense Wave Division Multiplexing (DWDM) equipment and digital cross-connects. The initial capacity of the network will be 400Gbit/s. The ultimate capacity after upgrades will be in multiples of Terabits (4 Tbit/s+ is possible). This combination of technologies will be introduced for the first time into the Australian domestic market. It is the preferred choice of long distance carriers in the USA and Europe and of international cable consortia. \

Reef Networks Pty Ltd
Reef Networks is an 1800 km privatised optic fibre network from Brisbane to Cairns, underwritten by a ten year lease agreement with Cable & Wireless Optus. The network is being constructed and maintained by Visionstream.

ABN Amro has arranged and underwritten the long term finance for the project. Vytel has a 30% equity stake in Reef Networks.

The new network will provide Cable & Wireless Optus with 2.5 Gbit's of capacity between Brisbane and Cairns, and will connect to the carrier's existing network that links Brisbane to Perth. The fibre link will pass through a number of regional centres providing access to an additional 614,000 potential customers for Optus.

Corporate Profile - Leighton Contractors
Leighton Contractors delivers tailored solutions and services in telecommunications, infrastructure development, building, civil and process engineering, and contract mining.

Leighton Contractors Pty Limited has been operating in Australia for more than 50 years and is a key operating division of the country’s largest contracting and project development group, Leighton Holdings. Leighton Contractors has an annual operating revenue of approximately $1 billion.

For ten years, Leighton Contractors has been strengthening its expertise in telecommunications with the design, construction and project management of telecommunications infrastructure projects. Its unique telecommunications infrastructure capabilities were developed almost ten years ago from a strategic partnership with Optus. That partnership netted Leighton Contractors the job of building Optus’ national optic fibre cable networks plus its telecommunications infrastructure facilities. Over 8,000 kilometres of cable has now been designed and installed by Leighton Contractors.

These capabilities were further broadened when Leighton Contractors was contracted to build a major share of the broadband networks which now carry Optus Vision cable TV programs and enable high speed Internet access for Optus customers. In 1996, the acquisition of Visionstream from Telstra again strengthened its expertise in the telecommunications market.

During the last ten years, Leighton Contractors and Visionstream have turned over approximately $2 billion dollars of work in telecommunications. And in the last year, alone, over $250 million in telecommunications work has been generated by the company. Today, Leighton Contractors employs over 2,000 people in telecommunications and is the largest provider of services and infrastructure.