Unwired, Intel in A$56m dispute

The financial pressures at Australian ISP Unwired are growing. After Unwired declared last week that the credit crunch had increased the cost of its planned mobileWiMAX network in Australia’s main cities by between A$20m and A$30m, the NSW Federal Court has now ordered the company to pay back to Intel the US chip giant’s original A$37.5m investment in Unwired plus a further A$18.5m.

Intel attached conditions to its Unwired investment of A$37.5m, which was made in August 2005, one being that the sum should be re-imbursed – plus interest and a redemption payment of $18.5m – if Unwired should change ownership or was not able to roll out the mobile WiMAX network as planned.

Intel made its financial demands shortly after the Seven Group acquired Unwired in May 2008, but Unwired refused to pay. Intel then lodged a claim in the NSW Supreme Court, which was then moved to the NSW Federal Court after Unwired lodged counter-claims against the US chipmaker.

The crux of Unwired’s argument is that Intel should only be able to call in its debt if the owners (the Seven Group) left the wireless broadband provider not “willing and able” to roll out WiMAX. Unwired maintains that the intention is still to roll out the network

According to Unwired it has made provisions to reimburse Intel’s A$37.5m investment but disputes the additional A$18.5m claim.

It is not yet clear if Unwired will appeal against the NSW Federal Court’s ruling.