Fri, Jun 24, 2011 - Page 10 News List

Telstra signs A$11bn deal to join broadband rollout


Australian telecoms major Telstra yesterday signed an A$11 billion (US$11.6 billion) deal to switch off its national copper network and join the government’s ambitious broadband rollout.

The former state monopoly also agreed to shift its customers over to the US$43 billion National Broadband Network (NBN), the largest infrastructure project in Australia’s history.

The NBN aims to connect 93 percent of Australians to superfast Internet by 2017, promising to transform the country’s economy.

“The decision to participate was made on the basis that the proposed transaction is expected to provide us with the ability to recover more value for the business than the available alternatives, given the loss of value after the NBN policy announcements,” Telstra chairwoman Catherine Livingstone said.

“The signing of these agreements is another important step, following two years of complex negotiations,” she said in a statement.

Canberra will pay Telstra A$11 billion over 30 years in compensation for access to its infrastructure and eventual disconnection of its copper telephone network, which will be replaced by the high-speed fiber NBN.

Telstra CEO David Thodey said it was “probably one of the most complex transactions that’s ever been done in the history of corporate Australia.”

“We think it is of great value for our shareholders, for our employees and, most importantly, for our customers,” he said of the deal, which is expected to be recommended by the Telstra board.

A majority of shareholders will have to approve the deal, and Australia’s competition watchdog must also first green-light a government plan to split the company’s retail and wholesale arms.

Telstra is the nation’s dominant telecoms firm by subscribers and revenue, and the government wants to split it in two in the hope of loosening its stranglehold on the market.

The announcement yesterday formalizes an in-principle agreement Telstra reached with the government in June last year and provides commercial protection for the telco should the NBN be scrapped.

The conservative opposition is strongly against the broadband rollout and it was one of few major policy differences separating it from the ruling Labor Party at last year’s elections.

Telstra’s major competitor, Singapore-owned Optus, yesterday also announced a “landmark” A$800 million agreement to progressively shift its 1.4 million fiber network households onto the NBN, starting from 2014.

“This deal supports the NBN to create a level playing field for all telcos. Australian consumers will be the winners,” Optus CEO Paul O’Sullivan said.

“We intend to use the NBN to turbo-charge competition and to deliver the full potential of a 21st century digital life to customers,” he added.

The government says the NBN will revolutionize workplaces and services — including manufacturing, agriculture, education and health — for the sprawling nation and will connect remote residents to doctors and online schools.

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