Telstra bids $5b for Aussie NBN: What next?

26 Nov 2008

After months of brinkmanship, Telstra submitted a bid Wednesday to build Australia's national broadband network (NBN).

But it is offering to deploy a network to some 90% of Australia's population, well short of the 98% target set down in the government RFP.

In return it is seeking a government guarantee that it will not be broken up, and assurances over commercial terms of the NBN project.

Telstra's was one of four responses received to the government's NBN tender, which aims to provide a minimum 12Mbps to urban and regional households in the sparsely-populated continent.

Communications Minister Stephen Conroy has promised to tip A$4.7 billion ($3.06 billion) of taxpayer funds into the project.

As late as its annual general meeting last Friday, Telstra CEO Sol Trujillo and chairman Donald McGauchie refused to say whether the carrier would take part in the tender.

For months they have attacked the newly-elected government over the NBN and the possible forced break-up of the carrier, which still dominates the Australian telecom sector.

Telstra said in a statement that "unresolved issues" over structural separation, commercial terms of the bid and the use of sensitive network information meant "unacceptable risk at a time of significant economic uncertainty".

As result the board had decided "not to put forward a fully-detailed bid", but was willing to enter into discussions with the government.

In its 12-page bid, issued in a form of a letter to the minister, Telstra said it would spend A$5 billion of its own money and deploy the A$4.7 billion government funds in the form of a loan.

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