Buy shares in Telstra: Slattery

Buy shares in Telstra: Slattery

Summary: Bevan Slattery, founder of datacentre provider NextDC, has said that people should invest in Telstra now as it stands the most to gain from the "toxic" National Broadband Network (NBN) project.

SHARE:
6

Bevan Slattery, founder of datacentre provider NextDC, has said that people should invest in Telstra now as it stands the most to gain from the "toxic" National Broadband Network (NBN) project.

"Buy shares in Telstra is my piece of advice. No not advice, suggestion," he told the Communications Day Summit audience in Sydney yesterday. "Telstra's in the box seat. They really are. They're sitting down negotiating with the government, they're talking about volume discounts. They really have the subscribers NBN Co needs to have a chance of even getting off the ground."

Slattery said that with the growth of mobile, once Telstra gets spectrum for its 4G services, and the money from its planned $11 billion deal with the government, "the rest is academic". Telstra would have the capital to invest heavily in the hot mobile area, putting it streets ahead.

Slattery said that as talks draw out for the final details of the deal, Telstra's negotiation position was stronger than that of the government.

"David Thodey is a genius, an absolute genius. The week before [former Prime Minister] Kevin Rudd got knifed was the time that they did that deal. Telstra has the best negotiator on its side and that's time. They sit there and wait and wait and wait. Time is always on their side," he said. "That copper is worth ... probably between $2 and $4 billion. What would people pay to get [the raw material] out of Telstra exchanges? They'd pay heaps for it."

If the NBN was an economic failure, which Slattery predicted would occur, Telstra would be the only potential buyer in his opinion.

"I think ultimately it will [fail], that's not me being anti-NBN, as a pure businessman, I look at this and think it is a bad investment and it will fail," he said. "If that's the case, then Telstra is the only buyer. They've got their spectrum, they've got their money and get to buy [NBN] back at 20 cents in the dollar."

Slattery said that the details of the NBN project had changed so much since it was first announced that only the name was still the same. He predicted that test sites would go for longer, with ISPs not being charged the actual cost of the service for a longer time in order to get customers onto the network.

"They're trying to change the entire basis of this network so it can fit into a return of some sort," he said. "If it wasn't so sad, it would be funny."

Although he was disparaging about the NBN's business case, Slattery was certain about the viability of the case for his own company.

Macquarie Telecom CEO David Tudehope had predicted at the summit that new datacentre players such as NextDC would be out of business within three years. At the closing of the event, Slattery backed his company with a $1 million bet.

"So David thinks I'm going to be out of business. The bet is on. The winner gets to select the charity that it goes to," he said. "Not only will I be right, but I will be co-locating 20 of his competitors.

"David Tudehope, time to put up or shut up."

Topics: NBN, Broadband, Telcos, Telstra

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

6 comments
Log in or register to join the discussion
  • I always knew David Thodey was a gentleman and a scholar and if he could transform Telstra woud be remembered as Australias greatest businessman but, a GENIUS, perhaps. Anyway all Australians will wish Telstra, and David, every best wish for a successful Australian company owned by millions of decent Australians.
    sydneyla
  • Good to hear an article from a business man with brains and fact, rather than these 'believers' and 'dreamers'.

    It will fail, and yes he is right, Telstra can then reacquire the disaster at a fraction of the cost. This is a 'no brainer'. But to some, it's still a 'mystery' and the benefits one day the NBN it will save the world are a joke, and they will never let go even when it stares them in the face.

    The sad part of it all, is that this will all come at a cost. A cost to the taxpayer which will only put us all behind, and to see our money going down the dunny.....
    Theguy-bbb4a
    • Theguy

      I agree, not a time to rejoice. As Phil Dobbie asserts..."NBN Bill passed, now for the loopholes" and there are plenty of them to look forward to on the long NBN deployment journey.

      Sure, Telstra by its acumen nature can only gain from the forthcoming, Murphy's Law, disarray. NBN Co is only just entering the woods and the exit sign is far too far. Already, the Samuel's past misadventures stand to anger and possibly bankrupt his flock of little people - Internet Service Providers (ISPs) he created by below cost cherry picking legislated legislated charge out rates by Telstra. At the last count there were 600 hundred - what's to become of them now that he has engineered over the top, POIs overheads, for NBN Co.

      Taxpayers will be in the soup but the real worry is for the industry and our national interest.
      Vasso Massonic
      • Addendum:

        "Soaring costs halt tenders for NBN" Friday April 1 2011... (April fools day or fair dinkum?)

        Courtesy:

        http://www.smh.com.au/business/soaring-costs-halt-tenders-for-nbn-20110331-1cnl3.html
        Vasso Massonic
  • Yes how prophetic buy Telstra (who have been at nearly all time lows) and still pay a fully franked 10% + div... no brainer really, the only guess was how low will they go and when to buy in...!

    Unless shareholders are dumb enough to vote down the NBN deal, Telstra should do well (as I and others have been advocating and telling TLS shareholders for about 18 months).

    Sad part, some can never look forward and the glass is always half empty!
    RS-ef540
  • Isn't this guy's 15 minutes of fame up yet???
    Hubert Cumberdale