Telstra signs $11-billion broadband deal with NBN Co

Telstra, Australia's largest telecommunications company, yesterday signed a A$11-billion ($9.5 billion) non-binding financial heads of agreement with state-owned National Broadband Network Co (NBN) in a deal that would see Telstra migrate its voice and broadband traffic from its copper and cable networks to NBN's soon to be rolled-out fibre optic network.

The deal, pushed by Australia's Prime Minister Kevin Rudd, will see the removal of a major obstacle in creating the government's ambitious $43-billion national broadband network, by NBN Co paying A$11 billion to access Telstra's infrastructure.

The deal will probably see the end of a year-long bitter battle between the Melbourne-based Telstra, a former state monopoly that was spun-off from Telecom Australia, and the government after the state asked Telstra to split its retail and wholesale businesses voluntarily or face a law-enforced separation in order to roll out its $37-billion NBN. (See: Australian government forces Telstra to split) 

While the government is not a party to the heads of agreement, Telstra said that it has received written confirmation from the Prime Minister rudd that Telstra would be able to bid for long term evolution (LTE) wireless spectrum should the deal be completed and that sufficient regulatory certainty will be provided on a range of matters for NBN and Telstra to enable the transaction to proceed.

Under the deal, Telstra will progressively migrate its voice and broadband traffic from its copper and cable networks to NBN Co's network as it is rolled out, but Telstra will continue to use its cable network to meet its pay TV contract with Foxtel.

''The heads of agreement is consistent with the government's high-speed broadband vision and desired industry structure. This agreement reflects a commitment by all parties to reaching a mutually beneficial outcome for Telstra investors, customers, employees and the industry,'' said Telstra chairman Catherine Livingstone.