NBN cash gives Telstra options: Thodey
Faced with the prospect of incoming cash from the $11 billion deal with the National Broadband Network Company (NBN Co) and the Federal Government, Telstra will be seeking to "re-orientate" itself with potential acquisitions and technology investments, according to CEO David Thodey.
"We are going to enjoy some very rich cash flows over the next period, and I think this creates an incredible opportunity for the company to re-orientate itself for the next 20 years, and that's what we will be doing," Thodey told ABC's Inside Business yesterday.
Should shareholders vote in favour of the deal at Telstra's annual general meeting on 18 October, the telco would begin receiving payments from NBN Co for access to its ducts and pits for NBN's fibre over the next 35 years. Telstra will also receive incremental payments from the government, as the telco's copper and hybrid-fibre coaxial (HFC) broadband customers are disconnected from their services and transferred onto the NBN.
Thodey said Telstra's focus would shift to the products it will offer, rather than the infrastructure itself.
"We've already been very clear about our strategy, about continuing to drive real value from our core telecommunications services here in Australia. You've seen us invest $800 million — or announce we're going to invest $800 million in the cloud computing area," he said. "Also, we're rolling out those new products in the small business area, digital business — what, nearly $500 million over the next four years."
The telco chief laughed off suggestions that Telstra would use the splurge in funds to go on a takeover "rampage".
"Never a rampage ... but definitely we have options and we have real capital management options. We could look at our dividend policy, we could look at a buyback program, or we can look at expanding our business. So for the first time in this company's history, we have real optionality going forward which we are very excited about," he said.
Since the announcement of the deal on Thursday, Telstra shares have slumped from $3.05 to $2.90.