Telstra agrees, provisionally, to participate in NBN, for $11b

Stuart Corner
Sunday, 20 June 2010 14:11

IT Industry - Deals

Telstra has signed a non-binding financial heads of agreement with NBN Co to participate in the rollout of the NBN that would see it transfer its customer traffic to NBN and provide NBN Co with access to its facilities that could deliver a post-tax net present value of approximately $11 billion.

Telstra would be paid to decommission its copper network and cable broadband services (but it would continue to provide access to the cable network to Foxtel for its pay TV service) and for the use of infrastructure such as ducts and exchange facilities to enable the rollout of the NBN. NBN Co said the deal would likely make Telstra its biggest customer.

Specifically the deal covers the use by NBN Co of Telstra ducts and pits, lead-in conduit to customers' premises, Telstra dark fibre and managed services for backhaul and use of rack space in Telstra exchanges.

The payment would take into account Telstra avoiding certain costs including some of the costs of meeting the Universal Service Obligation (USO. Payments would be made progressively to Telstra.

According to Telstra, the Government is not a party to the heads of agreement, but it has received written confirmation from the prime minister that it would be able to bid for LTE spectrum, should the transaction be completed, and  confirmation that sufficient regulatory certainty would be provided on a range of matters for NBN Co and Telstra to enable the transaction to proceed.

According to NBN Co, if final agreement were reached, "Telstra'¦would provide access to Telstra facilities and [there would be ] progressive migration of Telstra traffic onto the National Broadband Network, subject to regulatory approval. The agreement for these terms will have an approximate value of $9 billion. Separately, the Federal Government has agreed to progress public policy reforms with an attributed value of approximately $2 billion."

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