UPDATE 1-MTN to spend up to $68.5 mln on fibre-optic network

* Expects to finalise contract with Neotel

* To invest 600-700 mln rand in fibre-optic network (Adds MD quotes, details)

CAPE TOWN, Nov 19 (Reuters) - South African mobile phone group MTN (MTNJ.J) is to contribute up to 700 million rand ($68.48 million) towards a 5,000 km fibre-optic network in the country costing a total of 1.4 billion rand, a top executive said on Wednesday.

MTN's Managing Director Tim Lowry told Reuters he expected to finalise the contract to build the network with fixed-line operator Neotel [NEO.UL] and another unnamed local company by year-end.

"The intention from ourselves and Neotel is to finalise by the end of the year... MTN's share will be between 600-700 million rand," Lowry said in a telephone interview.

"It is a big saving. From the shareholders point of view, to have partners share big infrastructure projects will help reduce building and maintenance costs," he said.

Lowry said he was not sure the entire national fixed-line network will be completed by the target date of 2010, but most of it would, with a priority put on a 600-km route linking South Africa's commercial hub Johannesburg to Durban on the east coast.

MTN expects to save about 6.3 billion rand in transmission costs, one of the company's largest expenses, over the next 10 years. The operator uses Telkom (TKGJ.J) for the service.

Vodacom, the country's biggest mobile operator, is also building its own fibre-optic cable network. Vodacom is a joint venture between Telkom, the country's biggest fixed-line operator, and Britain's Vodafone (VOD.L).

(Reporting by Wendell Roelf; Editing by Mike Nesbit)