NBN Co execs and board allowed to keep Telstra shares

At least one NBN Co board member and one NBN Co executive still have shares in incumbent telecommunications company Telstra, but despite a potential conflict of interest as the two companies begin preliminary renegotiations, NBN Co executive chairman Dr Ziggy Switkowski has said that they may be allowed to keep the shares.

The new NBN Co executive and board, put together under the Coalition government after September's election, has frequently faced criticism due to the number of ex-Telstra executives joining the company. There is a potential conflict of interest, given that NBN Co is now in the process of negotiating with Telstra to access its copper and hybrid fibre-coaxial (HFC) networks as part of the Coalition's broadband policy.

Since the election, ex-Telstra executives have flocked to the company in droves. Ex-Telstra CEO Switkowski was the first recruit as the executive chairman, and since then, he has brought in other Telstra alumni including ex-Telstra media executive JB Rousselot as NBN Co's head of transformation, Telstra's executive director of business Greg Adcock as the new chief operations officer, and Telstra's ex head of media Justin Milne as a board member, among others.

Switkowski himself holds no Telstra shares, but under questioning from the Senate Select committee yesterday, he revealed that one unnamed board member holds Telstra shares. However, Switkowski said that he believes the board member has sold off the shares. Adcock, NBN Co CTO Gary McLaren and Rousselot also revealed that they still hold some shares in Telstra.

"I just want to put on the record absolutely thatI still hold Telstra shares, I've explained that to Dr Switkowski," Adcock said.

Adcock said he is taking advice from NBN Co's legal department on whether he can keep the shares, and that he was not involved in the renegotiations with Telstra, as had been stated by the company when he joined NBN Co.

In the meantime, Adcock retains the shares in Telstra.

"They are all parked, they are not traded at this point in time until they get closed out."

Even with executives and board members having Telstra shares, Switkowski said he believes this would not impact their negotiations with Telstra.

"We would expect such holdings to be disclosed and then to be discussed at this stage," he said.

"I'm completely confident that there is no conflict of interest that would prevent us from reaching the optimal outcome for NBN Co."

He said it is normal in business for executives to be able to have some shares in other companies, as long as they are "non-material".

"In a normal listed company, there are levels of shareholdings that are permitted, provided that they are non-material," he said.

"I am completely confident that when it comes to Telstra shareholdings, no board member or executive has material holdings in Telstra shares."

NBN Co's board charter is "currently under review", according to the company's website (PDF), and Switkowski said that there is a set of as yet unpublished standards to which he is holding the board accountable.

"If you are saying 'Is there a policy that says what quantity of shares are you allowed to hold?' then no, there is no such policy that I am aware of," he said.

"These standards are based on judgments of people who are experienced in these processes."

The negotiations with Telstra are still said to be in the preliminary stages, but the committee yesterday could not determine how both NBN Co and Telstra are determining the right price for access to the copper network. Telstra executives rejected the "anecdotal evidence" provided by the communications union on the state of the copper network, and said that the company has not yet determined the value of the copper network as part of the renegotiations.

NBN Co had made some assumptions on the cost of the copper network as part of the strategic review released last week; however, this detail was redacted from the publicly released version of the review. NBN committee member and Greens Senator Scott Ludlam said at a door stop yesterday that it shows that the review was based on guesswork.

"The problem is, everybody is working completely in the dark. Telstra don't have a current valuation of their network. The government says negotiations have barely started, and yet there are figures in that report that taxpayers and parliamentarians can't see. Which means effectively, we're operating on guesswork."