UPDATE 1-Providence Equity among bidders for Australia Leighton's unit-sources

Wed Dec 12, 2012 2:52am EST

* Deal seen valued between $657 mln and $910 mln - analysts

* Leighton selling NextGen to cut debt

* NextGen contributed about 10 pct to Leighton's FY11 EBIT - analyst

* TPG Telecom among other bidders - analysts

By Stephen Aldred and Victoria Thieberger

HONG KONG/MELBOURNE, Dec 12 (Reuters) - U.S. buyout firm Providence Equity Partners is among suitors advancing to the second round of bidding for Leighton Holdings' Australian fibre-optic network NextGen, sources said, in a deal some analysts see fetching between A$625 million and A$870 million ($657 million-$910 million).

Leighton, controlled by Spain's ACS, is selling the inter-city fibre-optic business NextGen and two smaller data businesses Metronode and Infoplex to pay down debt.

Australia's largest construction company, Leighton, has been plagued by losses from the delayed construction of a water desalination plant in the state of Victoria, and a road link to Brisbane airport in Queensland state which opened in July, months behind schedule.

It was not immediately clear who the other short-listed bidders were, but industry analysts have said Australian telecommunications firm TPG Telecom Ltd was a likely contender. Senior TPG officials have not denied their interest in the sale.

"There are strict confidentiality agreements which don't allow us to disclose anything about that, but it will be an interesting process," TPG Chief Financial Officer Stephen Banfield told a shareholders' meeting last week.

Analysts said TPG Telecom was the only logical domestic telecom firm that could buy NextGen and gain synergies in its fibre infrastructure network.

Leighton and Providence declined to comment. The sources declined to be identified as the sale process was confidential.

Leighton could bring in up to A$870 million from the NextGen sale, Citigroup analysts estimate, while Morgan Stanley expects a sale price of between A$625 million and A$750 million.

Leighton has $295 million of debt maturing in July 2014, according to Thomson Reuters data.

Morgan Stanley said NextGen contributed about 10 percent to Leighton's normalised earnings before interest and tax (EBIT) in fiscal 2011. NextGen's EBIT have jumped 347 percent since FY09, the Morgan Stanley report said.

Macquarie Group is advising Leighton on the sale.

Providence, focused on communications, media and other investments, manages funds of around $27 billion and has previous Asia investments in India's Indus Towers, in iQiyi, a joint venture with China Internet giant Baidu Inc, and Television Broadcasts Ltd, the largest broadcaster in Hong Kong.