Telstra and NBN likely to sign deal next week
08 Jun 2011
Australian telcos Telstra and NBN Co may finalise their multibillion-dollar deal next week, but the agreement would be made public only in mid-July.
In June last year, Telstra, Australia's largest telecommunications company, signed a $11-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 would end 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: Telstra signs $11-billion broadband deal with NBN Co)
Last October, Telstra had warned that its $11-billion deal with NBN company could come unstuck it was forced to maintain its ageing copper network for those who do not want to connect to the fibre network. (See: Telstra warns its deal with NBN could sour if forced to maintain copper network)
Harris Young, NBN Company chairman, said yesterday that a final version of the deal, worth $11 billion to Telstra, could be delivered in about a week which would put pressure on the negotiating teams to finalise the documents.
Young also defended the decision of NBN Company to negotiate a construction contract privately rather than following a tender process.
Telstra would receive at least $4.5 billion for transitioning customers off copper and on to NBN Co's wholesale fibre network. Additionally it would also receive $4.5 billion for letting NBN Co use its underground pipe and duct network, and to save about $2 billion in service and network obligations, according to a preliminary deal released last June.
Shareholders are expected to receive details of the deal following its approval by the cabinet and the Telstra board. They would then vote on it in October after the competition watchdog had signed off on it.
