Telstra sues NBN Co over AU$11bn deal

Telstra sues NBN Co over AU$11bn deal

Summary: Ahead of renegotiations over the AU$11 billion deal, Telstra is suing NBN Co over the perceived value of the agreement.

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Telstra is taking NBN Co to the New South Wales Supreme Court over claims that the government-owned company has wrongly valued the AU$11 billion deal.

After two years of negotiations, NBN Co and Telstra struck a deal in 2011 that would lease Telstra's pit and ducts infrastructure to NBN Co for the rollout of the fibre-to-the-premises National Broadband Network (NBN) and pay Telstra to shift its customers from the copper network over to the NBN.

Although the agreement was signed by the two companies in mid-2011, Telstra shareholders did not approve the deal until the Annual General Meeting in late 2011.

A Telstra spokesperson told ZDNet that it had taken NBN Co to court over when CPI adjustments should start to apply under the agreements.

"We have one take on the contract and NBN Co has another. We have not been able to reach agreement through a long mediation process, so, as provided for in the contract and as the next step, Telstra is asking the court to decide," the spokesperson said.

It is understood that Telstra believes the CPI should have come into effect on January 1, 2012, after the agreement was signed in June 2011. NBN Co believes the CPI should have come into effect from January 1, 2013, because the structural separation undertaking that Telstra was required to submit to the Australian Competition and Consumer Commission (ACCC), outlining how the company will separate its wholesale and retail arms, was not accepted until March 2012.

"The impact to us over the term of the agreement is significant, but not material from a market perspective," the Telstra spokesperson said.

It has been suggested that the difference between the two numbers is approximately AU$100 million.

Although NBN Co and Telstra are about to commence renegotiations for the deal, in light of the change of government and a potential shift in the policy that would require access to Telstra's copper line for a fibre-to-the-node network, Telstra said that the timing had nothing to do with the renegotiations.

"The timing of this action has nothing to do with a renegotiation of the NBN deal, although resolving this disagreement will help provide greater certainty, and as such may assist future policy discussions."

NBN Co had not responded to a request for comment at the time of writing.

The case has been set down for a directions hearing with Justice David Hammerschlag on November 8.

Topics: NBN, Government, Government AU, 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.

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9 comments
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  • Go Telstra, milk it for all you can. Give us yet another example of why Telstra can't be trusted with Australia's telecommunications infrastructure. Either way the coalition clowns and GimpCo will have to deal with it and knowing Telstra they probably planned for this all along... In 2019 we'll be saying "Welcome to 1999". Well done guys.
    Hubert Cumberdale
  • Circus de NBN Rollout

    Its ironic,

    The government puts 10 Telstra clowns and 10 NBNco clowns around a table and expect them to manage, execute and and finally deliver a complex fibre network as the backbone of Australia's communications fabric. They are left scratching their heads when they're left with a circus tent and elephants jumping through hoops wondering why it never worked.

    Firstly, you need to take a good hard look at Telstras current infrastructure and its state of repair isnt the evidence on the table already? Telstras skill at future planning = 0 Telstras skill at hiring subcontractors to patch their 'falling apart' network = 10.
    Lance Cuijpers
  • Doping transistors

    Some of the reasons for costs and delays are due to suspicion that Chinese companies would supply routers and other network devices which have been doped. Doping of transistors has actually been proven and optical inspection methods used to detect have had to be upgraded in order to detect these chemical/hardware trojans.
    I personally wouldnt purchase anything made from china that my data goes through, hell lets look at all them cheaply made modem/routers that have a user-Agent string to gain r00t access to the device. Imagine how easy it would be to gain access to crypto keys with a chemical/hardware trojan LOL. Paranoid much? Yes
    JohnnyJammer
    • I keep seeing people say doping of transistors has been proven

      yet no one has ever been able to provide any kind of citation or link that proves it. can you?
      theoilman
      • Go here mate

        This link welivesecurity.com/2013/09/17/chemical-trojans-baked-into-circuits-could-offer-invisible-way-to-steal-secrets/
        JohnnyJammer
        • In the real world

          Ok, from a network engineer perspective, how would these 'trojan' hardware crystals/potato chips transmit their data payload back to 'hacker' creator undisguised?

          Encrypted you might say? They would still need to go over NBN fibre and be routed through their infrastructure.... and when detected using a very simple SPI firewall it would be deleted before it left the country?

          I highly doubt the Trojan Crystal 'myth' is a valid reason for delaying a multi billion $ project. Its more likely that the directors are clowns smoking the reefer.
          Lance Cuijpers
  • Back to headline

    And the Copper will be for free
    Abel Adamski
  • Bwahahahahaha

    And Malcom was saying getting the copper off Telstra would not be a problem and wouldn't cost any more.

    We haven't even reached the negotiation table over that one yet and Telstra is going to court over when CPI cuts in. Now do not get me wrong please, I understand that $100m is a crapload of money and they SHOULD go after it for the shareholders.

    But does MT REALLY believe they will give the copper up easily and cheaply?

    The way Telstra was privatized was one of the worst things that ever happened to Australia's communications.
    Ramrunner-5dd3e
    • Spot On

      Your comment about Telstra Privatization hit the nail on the head mate.

      Yet another Australian Government mistake... and the rest of the country is left to pick up the pieces.
      Lance Cuijpers