Nextgen on the block as Leighton seeks cash

Some prime pieces of Australian IT&T real estate are on the block, with construction company Leighton Holdings announcing that it intends to sell network subsidiary Nextgen Networks.

The company’s decision will also put its Metronode data centre business and Infoplex IT arm, while Leighton’s will retain its network construction investments (Visionstream, its 50 percent holding in Silcar, and John Holland Communications).

The sales would be dependent on Macquarie Captial, appointed to manage the sale process, getting a good price for the businesses.

The “jewel in the crown”, Nextgen Networks, was founded in the telecommunications boom of the early 2000s, but initially struggled in the face of the dotcom crash and fierce competition from Telstra. Its survival under Leighton eventually made it a major player in the Australian long-haul network market. Nextgen is one of only three backhaul carriers linking Western Australia to the east coast (the other two are Telstra and Optus).

Nextgen also holds the contract to build and operate the Federal government’s 6,000-km Regional Backhaul Blackspots Program (RBBP) network, which brings competitive backhaul to remote towns in all mainland states. The company is also one of a handful of telcos offering NBN aggregation services to retail service providers too small to deal with NBN Co directly.

The RBBP network includes a link to Geraldton in Western Australia, partly deployed on the back of Australia’s bid for the Square Kilometer Array telescope project.

Metronode has been on an aggressive rollout in the data centre market, and currently has facilities in Sydney, Brisbane, Melbourne, Adelaide and Perth, while Infoplex offers cloud computing services.

According to Australian telecommunications newsletter Communications Day, the sale puts in doubt Leighton’s plans to build a new submarine cable between Australia and Singapore. Before the sale was announced, Nextgen would have been a natural foundation customer for the project.

The sale could feasibly turn into a bidding war – something that would delight Leighton Holdings. Communications Day names second-tier carriers iiNet and TPG as possible buyers, while the Sydney Morning Herald reports that even Telstra hasn’t ruled itself out of the bidding process.

The sale could net as much as $1 billion for Leighton. ®