The SingTel-owned company had planned to extend its 3G network to 96 per cent of the population - replicating the footprint of its older 2G network - but yesterday expanded that target to 98 per cent.

While that is still behind the 99 per cent coverage Telstra says is already being provided by Next G, Optus insists it is "going to be, very soon, in an absolute head-to-head position in terms of coverage with Telstra".

"We wanted to be more competitive in this space more quickly, and we're very keen to kill off the coverage issue as a differentiator between Optus and Telstra," the company's government affairs director, Maha Krishnapillai, said.

But the expansion is not expected to be completed until December 2009.

"It will take at least 12 to 18 months to fully roll this out, but that's not to say that there won't be many areas - very soon - that will have access to that enhanced coverage," Mr Krishnapillai said.

Optus announced its 3G expansion plans in January last year but only activated the first two base stations for the network this week, one in Queensland and the other in South Australia. Only one handset currently available to Optus customers - the Nokia 6120 - is capable of connecting to the 900-megahertz frequency used by the new network.

The expansion to 98 per cent is expected to raise Optus's construction costs from about $500 million to $815 million.

Vodafone, which shares a 2100-megahertz 3G network with Optus in metropolitan areas, is building its own 900-megahertz 3G network to reach 95 per cent of the population.

Optus - unlike Telstra - said it would "categorically" be offering wholesale access to its 3G network, and Vodafone did not rule out buying wholesale access for sparsely populated areas.

Telstra said Optus's expansion decision was evidence of "competition in action in an unregulated market" - a jibe at the competition regulator for setting access prices on Telstra's fixed-line network.

SingTel's locally traded shares finished 9c lower at $2.92.