From
http://business.theage.com.au/macquarie-defection-hurts-terria-funding-20080620-
2u9p.html

THE battle for the $4.7 billion national broadband subsidy has been
dramatically reshaped by Macquarie Group's decision to scrap its own bid and
join team Telstra instead.

Macquarie had been seen as the most credible independent bidder in the
broadband network tender, outside of Telstra and the Terria telco
consortium, before its appointment as Telstra's bid adviser.

The appointment guarantees the company will "not be proceeding with a
separate bid to roll out and operate the NBN (national broadband network)".

ABN Amro telecommunications analyst Ian Martin said the withdrawal of
Macquarie would help Telstra because it "basically removes the other most
credible bidder in the pack".

"It kind of suggests they've abandoned the idea of running a stand-alone
network business," he said. "To make it economic you've got to be able to
migrate the voice (telephone call traffic) across, and you just can't do
that without Telstra."

Telstra chief financial officer John Stanhope said Macquarie would help
Telstra work through "the financial complexity of the nation's largest
infrastructure project since the Snowy Mountains scheme, particularly the
mix of public and private financing".

"We want to build the best possible network that will serve Australians for
decades to come, and we can benefit from Macquarie's expertise in financial
engineering and structuring financial relationships to make that happen," Mr
Stanhope said.

As well as advisory fees, the investment bank is likely to be handed the
lucrative task of arranging funding on Telstra's behalf for construction of
the multibillion-dollar network. But Macquarie will have no equity
investment in the network, a Telstra spokesman said.

Macquarie's announcement puts pressure on the Optus-led Terria group to fund
a viable rival bid to Telstra's, partly because Macquarie had previously
been in discussions with Terria about a joint bid. Optus government affairs
director Maha Krishnapillai said Macquarie's shift from Terria to Telstra
was "true to form", but insisted the bank was just "one option" Terria was
looking at for funding. "This has no impact on Terria - none whatsoever," Mr
Krishnapillai said.

But Mr Martin believed the "big hit" on banks this month would make it hard
for Terria to secure enough external funding for its bid.

"(Optus owner) SingTel's not interested - its marginal dollar's invested in
Asia - and Telecom NZ is not capable, and no one else in the group is
capable of this kind of investment," he said.