Telstra shareholders give NBN deal a tick

Telstra shareholders have voted in favour of the $11 billion agreement to sign onto the National Broadband Network (NBN) at today's Annual General Meeting in Sydney.
Written by Josh Taylor, Contributor

update Telstra shareholders have voted in favour of the $11 billion agreement to sign onto the National Broadband Network (NBN) at today's Annual General Meeting in Sydney.

Telstra AGM

(Credit: Josh Taylor/ZDNet Australia)

Telstra CEO David Thodey and chairperson Catherine Livingstone today made the case to shareholders to vote in favour of the $11 billion agreement that the company struck with NBN Co after two years of intense negotiations. The deal will see Telstra lease its ducts, exchanges and dark fibre to NBN Co over the next few decades and the telco will migrate customers on the copper network and hybrid fibre-coaxial network to the NBN over the next 10 years for the roll-out.

After questions, Livingstone revealed that 99.09 per cent of proxy votes (6.4 billion shares) were in favour of the deal. After tallying up all the votes, Telstra revealed this afternoon that 99.45 per cent of all shareholders voted in favour of the deal.

Livingstone pointed to the Grant Samuel independent report commissioned by Telstra stating that regardless of any future government policy change — such as if a future coalition government scales back the NBN roll-out — Telstra will be $4.7 billion better off signing up for the deal.

Thodey said that today's vote would not change Telstra's planned strategy for the future, but would accelerate the company's move into next-generation technologies such as IPTV and voice over IP.

"The proposed NBN transaction does not change our strategy at all, but it does provide us with a unique opportunity to accelerate our investments in next-generation technology and build new competitive differentiation," he said. "There's strong momentum in the core of the business, we've got a clear strategy and we are ready to compete aggressively in the NBN world.

Outgoing Telstra chief financial officer and 45-year veteran of the company, John Stanhope, told shareholders that it was important to explain that under the agreement, Telstra was not selling its infrastructure to NBN Co as the network is rolled out.

"Something that's very important here that we all need to understand is that Telstra is not selling its assets. We are leasing our assets and getting a revenue stream over 30-plus years," he said.

Stanhope said the value of the copper over that 10-year period would have been reduced to zero, and that NBN Co will still be required to pay Telstra access payments over the long-term contract, regardless of a change of government policy, with NBN Co liable to pay up to $500 million to Telstra.

Following the positive tax ruling from the Australian Tax Office, and Telstra shareholder approval, Telstra still requires approval from the Australian Competition and Consumer Commission (ACCC) of the company's structural separation undertaking (SSU) and migration plan.

Stanhope said that the SSU is the "fundamental rules of the road for the next 10 years" as the NBN rolls out. He said that Telstra is working closely with the ACCC and he expects the company to submit a revised SSU in the coming weeks.

He said that the issues with the SSU were able to be resolved, but that if after the vote there were a material change to the proposed transaction, Telstra shareholders would be able to vote on it again.

During questions, Telstra shareholders voiced their disapproval of government policy, with one suggesting that Telstra could do the roll-out cheaper and faster than NBN Co. It was also suggested that Telstra was bullied by the government into signing onto the NBN through threats of mandatory structural separation and barring the telco from the upcoming spectrum auctions.

Updated at 4:03pm 18 October 2011: Added final vote information.

Editorial standards