NBN boss: We know the Telstra financials but we won't tell you

Stan Beer
Sunday, 28 November 2010 09:58

IT Policy - Government Tech Policy

The boss of the government-owned company in charge of implementing the NBN rollout today refused to reveal details of the project's business case relating to Telstra. Mike Quigley, In an interview on ABC TV, the CEO of NBN Co Mike Quigley claimed that the cost of buying Telstra's network could not be added to the cost of implementing the NBN but would not reveal how much Telstra is expected to improve NBN Co's bottom line.

In its revised project castings revealed last week, the Government claimed that the NBN rollout would now cost just $35.7 billion (instead of the earlier estimate of $43 billion) plus $13.8 billion to buy Telstra's assets.

However, when asked on ABC's Inside Business whether the true cost of NBN was actually the addition of the two sums, "absolutely not" was Mr Quigley's answer.

According to Mr Quigley, the Telstra acquisition had to be put into a different cost basket to the project rollout because it would be operational expenditure (OPEX) which would provide a return to NBN Co as opposed to the capital expenditure (CAPEX) of the project.

Mr Quigley said the the Telstra OPEX would provide an immediate rate of return but when asked what that rate of return would be he refused to say although he admitted that he knew what it was.

For weeks, much to the chagrin of the Federal Opposition, the Government has refused to reveal full financial details of its NBN business plan, only at the 11th hour under pressure from one cross bench Senator releasing a highly edited summary which contains no detailed financials. The Government has insisted that it cannot release the full report because it contains "commercially sensitive" information.

Mr Quigley's interview appears to confirm that one of the, if not the most, commercially sensitive details is Telstra's contribution to the commercial viability of the NBN project.

With the structural separation of Telstra legislation now passed, the only remaining obstacle to the rollout of the NBN is Telstra signing on the dotted line in return for $13.8 billion. For that, it needs shareholder approval provided by a vote at an EGM of the company.

for Telstra shareholders the question remains as to whether they will be given further financial details of the proposed acquisition, including what benefits Telstra is giving the NBN Co for its money, prior to being asked to approve the company's sale. Right now, the Government is not saying.