Telstra Agrees to Participate in Australia Broadband Plan for $11 Billion

Australian provider Telstra has signed a non-binding Financial Heads of Agreement with the National Broadband Network Co. (NBN) to participate in the rollout of the NBN’s national fiber network. The transaction, if completed, would deliver to Telstra a post-tax net present value of approximately $11 billion. This includes payment for the decommissioning of Telstra’s copper network and cable broadband service, use of Telstra’s infrastructure, and the value to Telstra of avoiding costs, including certain Universal Service Obligation (USO) costs. Payments would be made progressively to Telstra.??

The transaction would see Telstra progressively migrate its voice and broadband traffic from its copper and cable networks to NBN’s network as it is rolled out. Telstra will continue to use its cable network to meet its pay TV contract with FOXTEL.??

Telstra Chairman Catherine Livingstone said the milestone was encouraging after a year of complex negotiations.

“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,” Livingstone said in a statement.

While the government is not a party to the Heads of Agreement, Telstra has received written confirmation from the Prime Minister that Telstra would be able to bid for Long Term Evolution (LTE) wireless spectrum should the transaction 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.?