Telstra adamant that $11bn NBN deal figure non-negotiable

Stuart Corner
Sunday, 21 November 2010 13:16

IT Policy - Government Tech Policy

Telstra CFO John Stanhope told the company's AGM on Friday that Telstra was hopeful of finalising draft definitive agreements on its NBN deal by Christmas, but hosed down speculation that the $11b figure could be negotiable.

"We hear a number of observers suggesting that the $11b number is still open to negotiation," Stanhope said. "So, let me be clear. As a board, the approximately $11b is the value we believe is necessary for us to recommend our shareholders vote for our participation in the NBN in preference to other alternatives.

"Both the Government and NBN Co acknowledge this position and yesterday the minister told Parliament: "I am confident that the independent expert will confirm full value for Telstra when the full NBN deal proposal is put to shareholders in mid 2011."

Stanhope reminded shareholders that: "This $11b is after tax and in today's money. Of the $11b of valuation, around $9b relates to fair consideration for decommissioning our copper and cable broadband network, and agreement for NBN Co to pay for access to Telstra's infrastructure over a 30 year period.

"It is important to remember that this consideration will not be received upfront, but over the course of many years. The remaining $2b is the value to Telstra of the Government's commitments to policy changes which will reduce certain costs, primarily for the Universal Service Obligation."

Stanhope said timing of the deal was still uncertain. "The first step is the continued work towards finalising the draft definitive agreements with NBN Co by Christmas. In order to do this, a number of Government decisions around the Universal Service Obligation and how and where the industry will connect to NBN Co are required to provide certainty as we work towards an agreement."

Hs added: "Yesterday, the minister, senator Stephen Conroy, indicated that the Government would be making these decisions in the coming weeks. The next stage is for the required legislation to progress through Parliament'¦With draft definitive agreements finalised and legislation passed we can then work towards the final two key components of the deal - ACCC approval and an independent expert review of any agreement.

"With the required 28 days notice to shareholders, we still believe we could bring this to a shareholder vote by the middle of next year. NBN Co is also committed to this objective. And, yesterday, the minister expressed the Government's support for this mid 2011 timeline for conclusion.