Focus shifts to Telstra-NBN Co deal as Bills pass the Senate

Stuart Corner
Friday, 26 November 2010 18:47

IT Policy - Regulation

With legislation crucial to the NBN and NBN Co's deal with Telstra now through the Senate the focus shifts to the deal between NBN Co and Telstra: NBN Co's business plan is predicated on definitive and binding agreements being signed by year end.

These agreements would provide for the decommissioning of Telstra copper and HFC networks as the NBN rolls out, for the transfer of customers on these networks to the NBN and would provide the terms under which NBN Co can access Telstra ducts, exchanges and other infrastructure to rollout the NBN.

According to Ovum research director the year end time frame. If achieved it will clear the way for shareholder consideration of the deal in the first half of 2011. "This will be the final step in the biggest telecommunications reform since full competition was introduced in 1997," he said.

In the summary of its business case, released by the Government earlier this week, NBN Co spelt out the importance of the Telstra deal, and its progressing to a timetable that would see it put to Telstra shareholders, and accepted, at an EGM, before 30 June 2011.

NBN Co said the deal would "pave the way for a faster, cheaper, more efficient rollout of the National Broadband Network," would "reduce the overall cost of building the network and'¦result in higher take-up rates and revenue for NBN Co," would see "a greater proportion of the NBN rollout'¦underground, with less overhead cabling" and would mean that "Telstra will become NBN Co's largest suppliers of infrastructure and is likely to become NBN Co's largest customer."

It said that its Corporate Plan was "predicated on the execution of definitive agreements that give effect to the Financial Heads of Agreement with Telstra," but warned that "no binding agreement has yet been entered into with Telstra," and that there were "two major risks with regards to this transaction."

NBN Co said: "The [NBN Co Business] Plan assumes that the definitive and binding agreements [with Telstra] will be signed by end of 2010, with completion and satisfaction of all the conditions precedent by 30 June 2011. Any delay will impact NBN Co's ability to finalise its network design (deployment targets, transit backhaul, fibre access network (FAN) sites and PoIs locations), and therefore the Company's ability to achieve the Plan deployment targets.

If this timetable is not met NBN Co said "there will be significant impact to the implementation of the NBN and NBN Co's business model; the period required to achieve full deployment will also need to be extended."