Telstra signs on to the NBN for $11bn

Telstra signs on to the NBN for $11bn

Summary: Telstra announced today that it had signed a non-binding agreement with the National Broadband Network (NBN) Company which will see it have a part in the roll-out of the network — being paid billions for use of its infrastructure and for the decommissioning of its copper and cable broadband networks.

SHARE:

Telstra announced today that it had signed a non-binding agreement with the National Broadband Network (NBN) Company which will see it have a part in the roll-out of the network.

The deal, which will see Telstra provide access to its infrastructure and decommission its copper network and cable broadband services, was expected to be worth $9 billion, according to a joint release by Prime Minister Kevin Rudd, Communications Minister Stephen Conroy and Finance Minister Lindsay Tanner. It will provide Telstra with a post-tax net present value of about $11 billion (which includes reforms leading to avoidance of costs such as maintaining the universal service obligation).

The government had been seeking a commercial arrangement with Telstra to avoid the need for a duplication of infrastructure for the national roll-out of its $43 billion broadband network.

Under the deal, NBN Co will have access to Telstra's backhaul fibre and its network of pits, ducts and wires.

Telstra has also agreed that as the government's planned network is rolled out, it will migrate its customers from its copper and cable networks to the new fibre network. The company will, however, still use its cable network to fulfil its contract with pay TV company Foxtel.

The release said the deal will reduce the overall cost of building the network, with higher take-up rates and revenue. The deal also meant a greater proportion of the NBN network will be underground, with less need for overhead cabling than initially planned.

Under the deal, the government will establish a new entity — USO Co — to assume responsibility for most of Telstra's universal service obligations for the delivery of standard telephone services, payphones and emergency call handling from 1 July 2012.

The government will also provide $100 million to Telstra to assist in the retraining and redeployment of staff affected by the changes.

NBN Co will become the wholesale supplier of last resort for fibre connections in greenfield developments from 1 January 2011.

Telstra CEO David Thodey also said that he'd received written confirmation from Rudd that, if the transaction went ahead satisfactorily, the government would not ban Telstra from bidding for additional spectrum necessary for the roll-out of a long term evolution (LTE) mobile network.

Yesterday, Telstra and Nokia Siemens Networks announced that they had achieved downlink speeds of 100Mbps over 75km in LTE trials.

Telstra chairman Catherine Livingstone said the agreement was encouraging, however, Telstra chief executive officer David Thodey said there were still details to be nutted out. "We will continue to work with the government and NBN Co on the detail required to implement the principles agreed today. While today's agreement is an important step, a very significant amount of work must still be done on many complex issues," he said in a statement.

For example, how customers would be migrated, future regulation and taxation would need to be discussed, as well as the consequences of changes to the National Broadband Network's roll-out schedule.

The negotiation of definitive agreements was expected to take some months, according to the government release. When they are completed, the agreements will be put to Telstra shareholders and the government for final approval. The Australian Competition and Consumer Commission will also review the agreement.

Negotiations had been going on for months, with some sceptical that an agreement could be reached.

Topics: Broadband, Government, Government AU, Telcos, Telstra, NBN

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.

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

Talkback

11 comments
Log in or register to join the discussion
  • Personally, as long as the government, under recent polls pressure, hasn't succumbed to giving Telstra too much and have (as the article suggests) agreed to look after Telstra workforce, I think it's a real plus and just what quite a few of us have been advocating for ages...

    I will be interested in hearing what the resident, mainstay Telstra minions, think about it? Although I'm assuming, typically, their newest opinions will hinge upon tomorrows TLS share price reaction, lol?
    RS-ef540
  • The NBN has taken a massive step towards further viability today - as much as much of Rudd/Conroy communications/internet policy is on the nose, the NBN will be a vital piece of infrastructure for Australia. Nice to see them take a step in the right direction for a change!
    mwyres@...
  • I don't think Sydney and Vasso are happy with the deal, i think they said the deal should be around $80b or something of a rather.
    Salami Chujillo
  • Lol Salami, I think your right, that's what the eternal optimist minions were dreaming of, at first. Until guys like you and I burst their bubble and told them, take it or leave it, lol...

    Oh well, when their more precious than life itself shares start to head north they won't care and will actually try to rewrite histoty A G A I N, by claiming they were the ones who wanted an NBN deal all along, LOL!!!!!!!!!!!
    RS-ef540
  • Good to see the NBN taking a big step forward. My only concern is, as a massive government owned monopoly, who is going to keep them honest? With no competition what's stopping the NBN from overcharging and underperforming?
    anagara
  • I think the truth is that the Gov't would do anything to get a +ive news comment at the moment. As stated before the NBN smells bad because of Conroy & Rudd's filtering & the possibility of forcing ISPs to store all links with our names & addresses & that's just the crap on the IT side of the Government's absolute failures.

    As for Telstra, they're in the same boat but if they were to miss out on this it would have been Telstra's curtain-call. As it is I don't trust Telstra to not cause problems with charging & I bet that they will be looking for all the possible twists they can add to the costs they charge to give their added "services" that are no different to anyone else's
    alfielee@...
  • Well done Telstra. Finally you are getting the respect and recognition you deserve. I never understood the Federal Govt Telstra bashing campaign, nor the policy of spending $43B to break a monopoly it owned half of. Finally some sense in IT policy. And recognition that running a Telco is actually harder than it looks. And simply throwing lots of Public money around may not get the result you want. You have to ask the question now whats the point of the NBN now anyway. And whilst we have all been busy fighting each other our US cousins have already got a 1GB/s pilot to 50,000 homes.
    AnthonyO-c4587
  • Well this looks like it makes a lot of sense to me; now for all these "bubble heads" to do the same thing with the mobile network around Australia instead of multiple towers for multiple carriers ...... I know I am dreaming !!!
    markdimond
  • The election is some time away and a lot of water will flow under the bridge before we vote and a lot of change will happen. It is a possibility that Mr Abbott could decide that under his Prime Ministership he would can the NBN Co. and realise Sols visionary dream by requesting Telstra to build a superb fast Internet service via a FTTN system for very little cost. Who knows, let's wait and see.
    sydneyla
  • Still lauding Sol... OMG

    Mr. Abbott could ask IBM to build a typewriter and cassette player, for very little cost.
    RS-ef540
  • OMFG Sydney, ya still on about the 17th century FTTN? Move into the 21st mate.
    Salami Chujillo