Telstra reaches agreement with NBN Co and the government

Telstra’s CEO, David Thodey announced this morning that Telstra, NBN Co and the government have reached an agreement on the key terms regarding the decommissioning of Telstra’s copper network.

The agreement will see approximately $9 billion in post-tax net present     value to Telstra. An “in-principle” agreement with the government has also been made which will see an additional $2 billion in post-tax net present value.

“This important milestone represents substantial progress.  During the last eight months we have negotiated constructively over a range of extremely complex matters,” Mr Thodey said.

“We are working to complete the necessary documentation.  As soon as this is finalised by both NBN Co and Telstra, Telstra will be able to provide detailed information on the substance of the proposal.  While there is still work to be done, we are on track to put the proposal to shareholders with a target date of 1 July 2011,” he said.

As part of the agreement, Telstra will need to write a plan to transfer their customers from the old copper lines to the new broadband network.  The Australian Competition and Consumer Commission (ACCC) will need to approve the deal. Telstra has already begun trialling their services and hardware in Tasmania over the new fibre optic network.

Communications Minister Stephen Conroy said this morning: "Importantly, the Australian Competition and Consumer Commission will be scrutinising the arrangements as part of its consideration of whether or not to accept Telstra's structural separation undertaking. When these processes have been completed, Telstra shareholders will have the opportunity to vote on the agreement at its extraordinary general meeting which is expected to be held on the first of July this year.

"This agreement will fundamentally transform the telecommunications sector and this will benefit all Australians.  In the meantime, the rollout of the NBN is progressing well. More customers are coming on in Tasmania and the construction [continues] of first release sites on the main land,'' Senator Conroy said.

The announcement comes just one day after a report by the Economist Intelligence Unit was released which criticises the cost and effectiveness of Australia’s broadband network.