Telstra, NBN Co deal delayed to mid-2011

John C. Tanner
23 Dec 2010

Australian incumbent telco Telstra said that talks with NBN Co to reach an agreement on using its network for the NBN project will not be resolved until at least the middle of 2011.

NBN Co and Telstra had hoped that a deal to decommission Telstra's local loop network and lease its infrastructure – valued at A$9 billion – would be finalized before the end of this week.

But in a letter issued to shareholders Wednesday, Telstra CEO David Thodey and chairman Catherine Livingstone said that would not be possible “due to a number of key NBN Co and Government decisions remaining outstanding or taking longer than expected”.

Telstra said it now hopes to settle the outstanding issues and present the resulting agreements to shareholders by mid-2011.

The delay comes despite Monday’s release of the revised NBN Co business plan, which Telstra said provided “more certainty on key issues such as Points of Interconnect and NBN Co’s pricing.”

The letter also said Telstra is still discussing with the government how it will implement policies announced in June, “including reform of the Universal Service Obligation (USO), to which Telstra has attributed approximately A$2 billion of value as part of the approximately $11 billion total valuation” of the NBN deal.

The letter also addressed last month’s passage of the Competition and Consumer Safeguards Bill that outlines provisions for structural separation. Telstra said the structural separation requirements of the bill would be satisfied by the NBN Co deal and would not involve an “artificial and expensive” split of its wholesale and retail segments.

Telstra said it will also seek an independent expert opinion on the proposed agreements, as well as ACCC approval of its plan to decommission the copper network.

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