Telstra shrugs off $2bn NBN hole

Telstra shrugs off $2bn NBN hole

Summary: Telstra chief executive Sol Trujillo has shrugged off the potential financial effects of being excluded from the National Broadband Network process, saying that in a "perfect" scenario, Telstra only stood to lose $1 to $2 billion from its annual revenues.

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Telstra chief executive Sol Trujillo has shrugged off the potential financial effects of being excluded from the National Broadband Network process, saying that in a "perfect" scenario, Telstra only stood to lose $1 to $2 billion from its annual revenues.

Telstra CEO Sol Trujillo
(Credit: Telstra)

In a presentation at a Citigroup conference in the US, the details of which Telstra released this morning, Trujillo claimed the effects on the company of its fall from NBN grace had been blown out of proportion.

Trujillo pointed out that the NBN would only become a reality if enough funding could be found — something he considered uncertain in the current financial climate, if technical issues such as sub-loop copper unbundling and national security were addressed, legislative changes passed and if the network builder could carry out the roll out effectively.

Even if all of that occurred, Trujillo believed the ultimate effect on the telco would be low. "Rational analysis would suggest that at most a mid single digit percentage of revenues or perhaps $1-$2 billion may be at risk, and that is over an extended period of time because it takes time to build all this. And even if you build it, it's not a guarantee that it's going to work," he said.

According to Trujillo, the current retail metropolitan traditional telephony traffic, which he said only accounted for 25 per cent of revenues, could be migrated to the HFC cable network which Telstra intends to upgrade to achieve a maximum of 100Mbps up from its current top speed of 30Mbps.

Regional customers could possibly be brought onto the Next G network, or alternate fixed options such as buying access from the NBN. The company also already covered 92 per cent of the population with ADSL, and 80 per cent with ADSL2+, he said.

Time was on Telstra's side, a spokesperson for the telco said, pointing out that the longer the network builder needed to get the NBN up and running, the more time Telstra had to get people onto its own network. Once on board, they would stay, the spokesperson believed.

"The consumer will always decide on what's in their best interest," the spokesperson said. "A quantifiable service from Telstra versus a hypothetical one."

Trujillo's presentation included a table which quantified Telstra's NBN risk. It said that non-metropolitan retail, wholesale and government revenues, which accounted for 13, 4 and 2 per cent of 2008 revenues respectively, would be affected by a "perfect" future network.

When mitigating factors such as declining wholesale business and migration of customers to Telstra networks were considered, these percentages came down to Trujillo's estimate of a "mid single digit" in total.

Parts of the business which Telstra did not believe would be impacted included content, mobile advertising and mobiles.

Topics: NBN, Broadband, Telcos, Telstra

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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6 comments
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  • telstra can't build it anyway

    I get the feeling that Telstra can build anything these days because it is spending so much money on marketting that it has sucked itself up into its own out of control vortex.

    The message is loud and clear Sol - you simply can't build it.
    anonymous
  • The great pretenders

    I agree. Too much hot air, not much action, no balls.

    Very lame Telstra. What a shame.
    anonymous
  • US consultants suck Telstra dry

    We need to get the consultants out of Telstra!
    Profit is made by doing things badly for IT consultants: 6 month projects take years and budgets blow out by 500%.
    Telstra is daycare for adults as it is now.
    A new company is needed, and forget fiber for final delivery: wireless for last 1Km is the way to go.
    anonymous
  • The great pretenders

    "I agree. Too much hot air, not much action, no balls."

    What a ridiculous comment ! Why even bother posting it ?
    anonymous
  • telstra can't build it anyway

    You sir, are a dill.
    anonymous
  • wireless for last 1Km

    Absolutely, my thoughts exactly.

    As for Sol (sun shines out of his butt) Trujillo, that people would join & stay, he's got to be kidding himself. People might use it for a while but as the shelf-life of the contract begins to stale, approx 1 or 2 weeks after installation & the awareness of better service & loads per dollar, it will be the end of the big "T". Hopefully that stands for Trujillo & Telstra can become the organisation that Australia once loved again.

    Get rid off the American consultants & CEOs.
    anonymous