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Technology Stocks : Nortel Networks (NT)

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To: Paul Lee who wrote (2957)	7/1/1999 4:47:00 AM
From: dxn	Read Replies (1) of 14638

More good news, this time from Australia. Telstra's data with destiny By Michael Sainsbury Thursday, 1 July 1999 Telstra will move all its services, including voice, onto the Internet, under a radical plan to phase out the current public telephone system within 10 years. And in a surprise move the carrier has picked Nortel Networks over Cisco Systems to build the core of the new IP network , under the so-called data mode of operation (DMO) project Telstra network technology GM Gerry Moriarty said, “This puts Telstra clearly ahead of the competition.” “The technology Telstra selected will not only meet the high growth in data traffic on the network form existing products now, but it will also provide new capabilities to support products that are on the horizon or not even dreamt of yet.” But rather than being seen as an ambitious future looking plan, the move to IP is something in which Telstra really had no choice. The technical advantages and efficiencies of IP networks are such that without it Telstra would disappear. Telstra has overlooked worldwide data networks leader Cisco in favour of Nortel to provide the core network and the Telstra Access Server solution technologies and systems integration. Nortel now seems to be emerging strongly in the data marketplace after its Bay Networks acquisition a year ago. Cisco gets a seat on the DMO gravy train in partnership with long time Telstra partner Alcatel and will supply voice over IP technology. Alcatel will also provide network management products for the DMO. Lucent Technologies will provide the dial gateway and associated signalling gateway and improvements to Telstra's consumer Internet network. Moriarty refused to put even a ballpark cost on the whole DMO project - set to run into billions of dollars. He said this initial phase of the project would be worth around $500 million. But the biggest DMO cost will come with a nationwide rollout of a broadband network based on DSL technology. Moriarty said an announcement on this would be made within a few weeks. He also said that Telstra will continue to spend around 20% of revenue on capital works. On the company's current run rate this would mean over $20 billion in the next five years. Telstra also faces enormous backend systems and software costs on the project.

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