Ovum's Nigel Pugh comments on NBNCo/Telstra 'I do'

Alex Zaharov-Reutt
Thursday, 23 June 2011 12:47

Opinion and Analysis

There's no comment of 'pee-yew' from Ovum's Nigel Pugh on Telstra's NBNCo deal, instead noting that Ovum views the deal as a 'positive step forward for industry'.

While the NBN is still years away for most, the two biggest NBN companies, NBNCo itself and Australia's biggest telco, Telstra, have announced a 'definitive agreement' on how the two telcos will work together.

While the deal will presumably make it much more difficult for Australia's Federal Opposition parties to scuttle the NBN should they win Australia's next Federal Election, the deal is also a crucial milestone for Australia's current and somewhat troubled Federal Government.

Into the fray to have a commentative spray is Ovum man, Nigel Pugh, to have his say.

Mr Pugh is Ovum's Consulting Director, with his comments stating that: 'Today's announcement by Telstra that it has signed the NBN definitive agreement with NBN Co and the Commonwealth marks an historic day for the industry and especially for Telstra.

'The deal is similar in structure to what had been pre-announced in the June 2010 non-binding Heads of Agreement and Ovum views the deal as positive step forward for industry.'

Mr Pugh adds that: 'It's clear that Telstra has done its own cost benefit analysis for its participation in the deal versus the alternatives and has determined this is the best approach in the current environment.

'If the remaining hurdles are passed (ACCC acceptance of Telstra's structural separation undertaking & migration plan and Telstra's shareholder vote) then Telstra will have a clear strategic direction for operation of its retail and wholesale functions in an NBN world.

'This will also be a positive for NBN Co as the key hurdles to its nationwide rollout will have been overcome.'

'Futhermore,' adds Mr Pugh, 'although there has always been an overhang to the deal with regards to a change of government, our initial reading of the cessation clauses don't position this deal as a poison pill if there is a change of government at the next election.

'NBN Co will have to reach 20% fibre coverage for the compensation payment to occur and, based on our reading of NBNCo's three year corporate plan, we think this will be a stretch to achieve by 2013.'

Thus endeth Mr Pugh's fresh overture from Ovum's oven, with the end of the NBN Co's 'entrée period' presumably now reached, and NBN's chiefs presumably that much safer from being impeached.