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Legislative Assembly for the ACT: 2001 Week 10 Hansard (29 August) . . Page.. 3632 ..

MR HUMPHRIES (continuing):

However, for TransACT to be a part of that spectacular growth, we must all ensure its future is not put at risk in the short term. This is not a project that will make millions overnight: it is a long-term investment in the future of this city. TransACT shareholders have shown their confidence in the project by their commitments to provide extra funding to ensure its future. In the current economic climate for overseas telecommunications companies, this is a major vote of confidence, both in TransACT and in the ACT.

TransACT is not the only company of its type to need further funds to deploy its business strategy. For example, Austar United announced on 15 August that it would need to raise up to $150 million extra to continue its current expansion.

In June and July of this year, TransACT shareholders, including its national and international investors, agreed to provide extra funding for the continuation of the Canberra rollout. Initially, TransACT's shareholders assessed their investment against the last call for funds on their original shareholdings. Against this assessment, Telecom Venture Group (TVG) decided to forgo increasing its original shareholding, but instead is participating in the preference share issue. Actew decided to take up the available preference shares.

With Actew agreeing to participate in the preference share issue to the extent of $20 million, the total preference share issue will be up to $50 million, with two other shareholders, TVG and AGL, contributing up to $15 million each. Currently, Actew has invested $11 million in start-up assets, and $28.5 million in cash contributions, giving a total of $39.5 million. For this investment, Actew has received 45.2 million shares in the company. Following the board meetings in June and July, Actew initially committed a further $20 million in cash contributions for equity to be provided progressively over the coming year. All other investors also committed additional investment by way of preference shares.

Following this funding round, the breakdown of equity in TransACT will be Telecom Venture Group, 26.9 per cent; Actew, 35.6 per cent; Australian Gas Light, 22.8 per cent; Marconi, 11.1 per cent; and others 3.6 per cent.

Mr Speaker, I have been asked several times about the cost of the TransACT rollout. I am aware that the chairman of TransACT has indicated that it could be of the order of $200 million, but this is clearly a very complex issue on which to offer an opinion. Any estimate of the probable cost of the project would depend on a large and uncertain number of factors, including the extent of the rollout, the timing of the rollout, the take-up rate as it goes past potential customers, and assumptions about the customer yield profile.

Variations in any of these parameters, the value of the Australian dollar, or the effect of competitive responses on potential customers, would see the cost of the rollout change. For example, if fewer households were to take up the service, the budgeted connection expenditure would reduce.

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