Telstra Aims for NBN Acquisition - Should Consumers Be Bothered?

Australia’s largest telecommunications company, Telstra, sets its eyes on the National Broadband Network (NBN). The company is making big plans and these include the purchasing of NBN Co from the federal government.

New Operating Businesses

Telstra is planning to form Telstra Group in late 2021, which will comprise four separate operating businesses. One of these is InfraCo Fixed, the sector that will handle telco operations related to fibre and data communications.  

Nevertheless, this plan is still subject for approval from Telstra’s shareholders. On top of that, in the event that the NBN Co acquisition pushes through, there will be changes with the current business structure followed by InfraCo Fixed. 

From a statement said by Communications Minister Paul Fletcher:

“To contemplate a business combination with NBN at a future point in time, it would probably require a more substantive delinking of InfraCo Fixed and the Telstra Group as we would need to be not vertically integrated…”

What Do Other NBN Providers Think?

Not surprisingly, other telcos are not happy with Telstra’s move. Of course, it will somehow affect competition in the market and eventually the products and services offered to the consumers. 

According to Andrew Sheridan, the vice-president of regulatory and public affairs of Optus, “I think it would be a terrible outcome for Australian taxpayers, competition and consumers to think that we can somehow allow Telstra to buy back the NBN, when that would effectively shred 10 years worth of competition policy...”

Will the Acquisition of NBN Co Affect the Consumers?

In 2011, the government and NBN Co signed a deal with Telstra. The telco received $11 billion in exchange for decommissioning the copper network and shifting its customers to the NBN service. Critics believe that this could be one of the reasons why NBN plans became expensive.  

And now, it is quite alarming for other telcos and consumers that Telstra is planning to acquire the NBN for itself. It is like walking back to the 1980s, the telco’s glorious days of monopoly. What critics foresee is a vertical monopoly controlling both retail and wholesale network services in the market. This mega-merger is definitely too hard to swallow. 

To guarantee unbiased competition, which does not exploit the interest of consumers, some think it might be better to keep the NBN a publicly-owned corporation. 

The Bright Side of the Merger

Whilst not everyone is happy with what could be Australia’s biggest merger in its entire history, we cannot deny the fact that the acquisition will bring a significant amount to the company’s pocket. Estimated revenue of $10 billion and $30 billion in infrastructure assets will give NBN Co the power to repay its debts and return some to its shareholders.  

We’ll soon see if the privatisation of the NBN will become a reality. For now, what we can do is hope for a decent internet speed that is affordable and accessible regardless of your location, whether you live in the big city or somewhere in one of the outback towns of Australia.