Telstra tips assets into NBN Co
The AUD$11b break up it had to have
Telstra has committed to the final step towards its pivotal part in the deployment of Australia’s national broadband network rollout, with the long anticipated finalisation of Definitive Agreements with the government and NBN Co.
The $AU11 billion deal will ensure the nations incumbent carrier’s pit-and-duct infrastructure will be used by NBN Co. Telstra customers will be transferred to the NBN infrastructure as it is rolled out, with Telstra retaining the retail relationship and receiving transfer payments from NBN Co.
Telstra and its shareholders will expect to see an annual $300 million windfall from the network asset deal. The first cash payment is expected to be paid this year but the overall $11 billion figure represents a a net present value and may fluctuate over time.
"The agreements are expected to also contribute to free cashflow generated in the medium term, provide us with greater financial flexibility and a stronger balance sheet, and help to offset the decline in free cashflow expected as customers migrate onto the NBN," said Telstra CEO David Thodey.
Under the arrangement Telstra will retain ownership of its Hybrid Fibre Coax (HFC) cable network and its 50 per cent share in Foxtel. Thodey who enthusiastically tussled with the government over the deal for three years said it was the best scenario compared with other realistically available options.
“This outcome should deliver a better overall financial outcome, a more stable regulatory environment and greater strategic flexibility, enabling Telstra to maintain a strong focus on our key areas of growth,” Thodey said. Telstra’s Structural Separation Undertaking (SSU), recently accepted by the Australian Competition and Consumer Commission (ACCC), had also come into force.
All those tubes.
That fil up with water every time it rains.
Re: All those tubes.
at least fibre is more resistant to the effects of water than copper.
@D.M. -- Re: Don't blame the current gov. I did say 'both'!
Actually, I did say 'both':
"As both sides of government have been responsible for this opportunistic money-grab,..."
...But you're almost certainly correct, the Libs will sell of the NBN. Irrespective of its worth to Australia as a utility, it'll be sold off to those large corporate telcos that have a vested interest. By owning the NBN telcos will be in a position to double-dip on communications charges. They'll profit on both line costs as well as normal telco charges.
BTW, I've NEVER seen any proposal which shows or adequately demonstrates that it's better for consumers or the national interest than one in which the NBN is owned by a revenue-neutral corporation consisting of 51% government, 49% telco shareholding. In a fair system it's a win-win for both the consumer and telcos. Being revenue-neutral, line costs to telcos are (a) the minimum that can be charged after maintenance and development, and (b) all comers, new and future telcos/users, will get access to lines at the same rates as existing telcos. (This was never so with Telstra, it had an unfair advantage by both owning and using the lines/cableways itself, yet it was also the wholesaler of these lines to other telcos. Not only is this a farce but also it was and still is unfair on the competition, and ultimately consumers are forced to pay extra.)
Moreover, it's in the interest of the telcos to ensure the NBN (which really is a line and cableways authority and ought to be called such) runs efficiently and at minimal cost. Government with its 51% holding ensures consumers are represented and the telcos with their 49% will almost guarantee that government won't fuck it up as it does with so many things it fully controls--just imagine the telcos' noise if government stuffed it!
Nevertheless, such an authority is extremely unlikely, instead we'll end up with a for-profit corporation that's wholly owned by the telcos alone (this of course is their preferred option other than say Telstra's preferred one--65% Telstra, 35% other telcos or such, with the 35% sliding over time as Telstra buys the others out). It's hard to believe this won't happen so powerful the telco lobbying (especially Telstra) upon weak, money-hungry, corruptible government.
If anyone has a proposal for another scheme that would be better for consumers than this one then let's hear it.
The NBN ought to be a national symbol of pride as utilities once were. I recently heard it aptly put that 'in the Victorian era both governments and citizens had almost a fetish with public works that would benefit the nation and built them to last generations'. For instance, look at railway infrastructure, it was so well built we're still using it 150 years later hardly unchanged.
Alas, that was in an era when pride in one's nation and nation-building were more important than just mere profit alone.