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Telstra to strike National Broadband Network ~deal by Christmas

By Rachel Hewitt

Herald Sun

October 29, 2009 12:00am

TELSTRA boss David Thodey says the telco will make every effort to strike a deal with the Rudd Government by Christmas over what role it is to play in the National Broadband Network (NBN).
But he described Broadband Minister Stephen Conroy's timeframe as "very aggressive".

And, in a big change of tune for Telstra, finance boss John Stanhope said structural separation could be a "win-win" for shareholders, the Government and Australia if certain "conditions" were met.

However, Telstra reiterated its opposition to the Government's controversial regulatory reform Bill, which will force the functional split of the telco, The Herald Sun reports.

Mr Stanhope said the telco would consider selling assets to the NBN for cash if the price represented fair value, or "even equity, if there is some form of guaranteed return".

But, addressing an investor briefing yesterday, Mr Thodey said any big changes to the company would be subject to shareholder approval.

Telstra wants Senate debate of the plan to be delayed until an NBN implementation study is completed and talks between Telstra and the Government are finished.
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Mr Thodey said Telstra would be unable to make any recommendation to its board until it was aware of the NBN plans.

"And if we can't make a recommendation to the board, we definitely can't take anything to our shareholders," he said.

Mr Thodey said Senator Conroy was very keen to see progress on the negotiations by Christmas, and Telstra was working towards that, "but this timeframe is very aggressive because there's an enormous amount of work to do".

"The discussions with NBNCo are progressing well," Mr Thodey said. "Can I promise that a deal will be done? No, I can't promise you.

"Do I think that there is a pathway to get to a deal? Yes I do."

Mr Thodey said negotiations were "extraordinarily complex".

"We have not seen anything like this anywhere else in the world, so we have a lot of work to do," he said.

Mr Stanhope said structural separation appeared to be a "win-win" if conditions were met, including fair compensation for any assets transferred to the NBN and ensuring neither the minister nor the competition regulator could overturn the separation.

The other condition was that Telstra be allowed to keep its stake in pay-TV operator Foxtel, keep its HFC cable network, and be able to access advanced wireless spectrum.

Mr Thodey said there was no fundamental change to the telco's direction and again emphasised the need to improve customer service.

He re-confirmed the company's guidance to achieve low single-digit growth in revenue and earnings before interest, tax, depreciation and amortisation this financial year, but said the strong Aussie dollar had put pressure on overseas revenue.

Telstra shares gained 5, or 1.54 per cent, to $3.29 yesterday.