Telstra strikes A$11b NBN agreement

Nicole McCormick
21 Jun 2010

Telstra will migrate its fixed-line infrastructure and customers across to the government’s NBN Co fiber project in a deal worth A$11 billion ($9.66 billion).

After nine months of negotiations, Telstra yesterday said it had signed a non-binding Financial Heads of Agreement with NBN Co to “progressively migrate its voice and broadband traffic from its copper and cable networks to NBN Co’s network.”

“The transaction, if completed, would deliver to Telstra a post-tax net present value of approximately A$11 billion,” said Telstra.

To begin with, the Sydney Morning Herald said Telstra will receive about A$4.5 billion for allowing NBN Co to access its network of ducts, pits and backhaul fiber.

A second A$4.5 billion will be paid progressively to Telstra as it decommissions its copper network and migrates its voice and broadband customers onto NBN Co’s fiber network which will reach 90% of the population within eight years.

Telstra also stands to reap A$2 billion from cost savings, such as the government rejigging Telstra’s universal service obligations.

The A$11 billion package deal is just under the A$12 billion Telstra was reportedly asking, but considerably higher than the A$8 billion maximum NBN Co wanted to pay, said the Australian.

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