Telstra confirms: no definitive NBN agreement this year

Stuart Corner
Wednesday, 22 December 2010 10:02

IT Policy - Regulation

Telstra has written to shareholders telling them that it will not be able to meet its earlier commitment to complete definitive agreements with NBN Co by the end of the year, but that it still hopes to present the deal to them my mid year so they can vote on it.

Telstra had earlier hoped to have definitive agreements signed by Christmas and had indicated that, even if that were to be achieved, presenting a proposal of shareholder approval by mid year would have been tight.

It must first get ACCC approval for its undertaking to decommission the copper network, must appoint an independent expert to report and the proposal and must give at least 28 days notice to shareholders of the meeting. At the company's AGM in late November, CFO, John Stanhope said that with a definitive agreement by Christmas "we still believe we could bring this to a shareholder vote by mid year."

In the letter to shareholders, signed by chair Catherine Livingstone and CEO David Thodey, Telstra gave no indication of a revised date for signing of the definitive agreement, saying "Due to a number of key NBN Co and Government decisions remaining outstanding or taking longer than expected [a definitive agreement by year end] has not been possible. These are important issues for consumers and the industry, and critical to the value of our agreement with NBN Co, so we understand the need for the Government to take additional time to consider all their implications."

The letter added: "With the release of the NBN Co business plan on 20 December 2010, we now have more certainty on key issues such as points of interconnect and NBN Co's pricing. All parties continue to work on resolving the outstanding issues and we continue to seek fair value for you, our shareholders.

"Assuming the remaining aspects are resolved, the definitive agreements will set out in detail how NBN Co will pay approximately $9 billion (post-tax net present value) for Telstra to decommission its copper network and HFC broadband product, and for the long term lease of Telstra infrastructure."

To keep shareholders up to date on progress, post signing of the definitive agreements, Telstra plans to host a series of retail shareholder information sessions around the country following its half year results announcement in February."