Syntheo walks from NBN construction contracts

Construction partner Syntheo will not extend its contracts to construct the NBN fibre network in South Australia and Western Australia.
Written by Josh Taylor, Contributor

Syntheo, a joint venture of Lend Lease and Service Stream, has come to a mutal agreement with NBN Co to not renew construction contracts due to exire in September and November this year for the construction of the fibre network in South Australia and Western Australia.

Under the agreement, Syntheo will continue to complete the work in progress by the beginning of 2014. Lend Lease has announced that it has come to an agreement with Service Stream to pick up the remainder of Syntheo's work for NBN Co until the completion date.

Syntheo had already been forced to hand back the construction contract for the NBN in the Northern Territory, after it was revealed in February that NBN Co would miss its target for premises passed by the end of June because of delays with Syntheo's construction work in the Northern Territory, Western Australia, and South Australia.

Additionally, Syntheo has agreed to repay NBN Co advances for overhead costs.

The initial Northern Territory and South Australia two-year contract was worth AU$141 million to Syntheo, while the WA contract was worth AU$174 million.

In South Australia, NBN Co said that SA Power Networks will become the prime NBN contractor, while Downer EDI had already begun construction work in Western Australia.

NBN Co CEO Mike Quigley said in a statement that Syntheo's decision to pull out of the project would not affect the overall cost of the NBN or the expected completion date in 2021.

Service Stream's other contracts with NBN Co around fibre maintenance and delivering the NBN to new housing estates will continue as planned, according to NBN Co.

Service Stream remains in a trading halt as the company expects to report a substantial material loss for Syntheo in the 2012-13 financial year when it releases its results later this month.

New construction contracts for Western Australia, Northern Territory, and South Australia will not be signed until after the election on September 7, with NBN Co now operating under caretaker conventions.

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