As the result of a strategic supplier deal with Nortel Networks, Optus's network capital expenditure costs are expected to reduce by up to 50 per cent over the next five years.

Dr Stephen Rotheram, Managing Director Networks for Optus, said there were three main drivers for doing the deal.

"First, the agreement with Nortel Networks will deliver Optus the state-of-the-art technical capabilities we need to continually improve services and technology for our customers.

"Second, this means we can better manage our capital spend and ongoing support costs in a growing business - potentially reducing our costs by up to 50 per cent over the term of the deal.

"Third, we are now in a business alliance with Nortel Networks, enabling us to leverage their market presence to open up new customer and revenue-generation opportunities," he said.

Under the terms of the deal, Nortel Networks will supply Dense Wave Divisional Multiplexing (DWDM) network equipment for Optus's long-haul transmission network. This will complete the rollout of the Optus national DWDM optical network, positioning the carrier to provide wholesale and business customers with greater capacity and expanded services.

In addition, Nortel Networks will supply equipment for Optus's metropolitan transmission network including DWDM, Synchronous Digital Hierarchy (SDH) and bandwidth management equipment. Nortel will also supply voice switching equipment, including next generation voice switching technology.

Dr Rotheram said the agreement would give Optus savings in ongoing support costs for the new generation technologies.

"This is an innovative way for us to manage our networking needs. Not only will we have pricing arrangements in place for at least five years, we will also have reduced day-to-day expenditure on support.

"These savings come at a time where data capacity is becoming more commoditised, and carriers will have to spend more to sell more.

"To meet our customers' needs, Optus is expected to double the capacity of its data network in the next two years - and voice is expected to double in five years.

"By stabilising our costs, we can better manage our network growth. In turn, this guarantees the highest quality networks for our customers," he said.

Over the five-year term, the Nortel Networks deal is expected to be worth $350 million.

For more information:
Linda Collard
Optus
Phone: 02 9342 5045

Hannah Watterson
Nortel Networks
Phone: 02 8870 5625