April 7 (Bloomberg) -- Australia will take the lead in a A$43 billion ($30.5 billion) project to build a high-speed Internet network after turning away bidders whose plans the government said were inadequate.

The government will own at least 51 percent of a company that will make initial investments of A$4.7 billion to build and operate the network, the government said today. The network will provide Internet access 100 times faster than currently available speeds, it said.

Prime Minister Kevin Rudd said the country’s largest-ever infrastructure project will help support 200,000 jobs and provide a boost to the faltering economy. The spending comes on top of some A$88 billion announced in the past six months to protect Australia from a recession.

“It’s time for us to bite the bullet on this,” Rudd told reporters, adding that building may begin in June. “This is a major infrastructure project that will support 25,000 jobs every year over the eight-year life of the project.”

The government today rejected bids from the Singapore Telecommunications Ltd.-led Terria group, as well as from Canadian-based Axia NetMedia Corp. and Acacia Australia, a group led by former Telstra executive Doug Campbell and Australian businessman Solomon Lew.

Telstra Corp., Australia’s biggest phone and Internet company, in December was excluded from making a bid to build the nationwide network because it didn’t provide a plan for small businesses.

‘Back in the Game’

Telstra rose as much as 5 percent to A$3.37 in Sydney trading after Communications Minister Stephen Conroy said the company will be offered a chance to invest in the network.

“The market sees that Telstra is back in the game,” said Ben Potter, Melbourne-based research analyst at IG Markets. “This offers the opportunity of potentially partnering with the government. Had one of the other bidders been awarded the contract, Telstra would have been out of the race.”

The government last year called for tenders for the project, saying it would invest A$4.7 billion to help build the network. Today’s total investment is almost ten times that amount, with the government prepared to hold a majority stake of the new company and get the rest from private investors and the so- called Australian Infrastructure Bonds.

The spending, which the government said may reach A$43 billion over eight years, may help Australia’s level of broadband Internet usage rise to levels approaching those of other developed markets. About 17 percent of Australia’s population had high-speed Internet connections, short of the 19 percent in the U.S. and Japan, and 26 percent in South Korea and Switzerland, according to JPMorgan Chase & Co.’s Internet Investment Guide last year.

The project also presents an opportunity for makers of Internet equipment such as Cisco Systems Inc. to win orders as the global recession discourages telecommunications companies to spend on network gear.

To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net

Last Updated: April 6, 2009 22:37 EDT