Telstra shareholders pass deal with Oz government

Telstra shareholders have, with some quibbles from the floor, approved the proposed $AU11 billion deal between the carrier, the government, and NBN Co.

Under the deal, some aspects of which which are still being mulled by the Australian Competition and Consumer Commission, Telstra will receive $AU11 billion at net present value, in exchange for withdrawing services on its copper network as the fibre is rolled out, and migrating its customers connections to the NBN.

The arrangement also means NBN Co will be able to rent space in Telstra ducts for its fibre network – an arrangement widely misunderstood as representing “Telstra selling its network”.

Telstra CEO David Thodey told the meeting that many of the changes Telstra will experience were inevitable anyway: fixed network revenues are declining, as is the value of the copper network.

“The NBN will accelerate our need to migrate to this new world,” he said. “Our strategy is … to build intelligent networks, differentiated content, focus on applications, and introduce new tariff structures,” he told the annual general meeting.

Proxy votes alone were sufficient to carry the vote, at more than 99 percent, which represented more than 50 percent of the total shareholding.

The vote reduces by one the potential political headaches associated with the network: had shareholders rejected the deal, NBN Co would have found itself with a more expensive rollout, competing against Telstra’s incumbency. Telstra, on the other hand, would have been dragged into a capex war on a national scale.

The remaining hurdle for the deal – and for the structural separation of the telco – is regulatory approval by the ACCC. Both Thodey and CFO John Stanhope reiterated their belief, and the ACCC’s public statements, that the regulatory concerns can be addressed without a serious impact on the deal.

However, Stanhope promised a new shareholder vote should it be required.

At times, the AGM appeared to be treated as a political platform by shareholders, carrying such a consistent brief against the government as to make questions from the floor sound like a morning on right-wing talkback radio. Apparent political plants included the assertion that Australia is “a dictatorship”, that the government has given the NBN a “blank cheque”, and trying to maintain the myth that Telstra is selling its network to the NBN. ®