Peter Martin of The Age today under the headline "NBN labelled a waste to set Labor back years" writes:
"IT MAY be popular now, but Labor's $36 billion national broadband network is shaping up to be a financial disaster that will set Labor's image back decades, rebranding it the party of waste and extravagance.
That's the view of Percy Allan, president of the Australian Institute of Public Administration and a former head of the NSW Treasury under premiers Wran, Greiner and Fahey."
The reason given by Percy Allan why NBN is shaping up to be a financial disaster is:
"If a lower than expected proportion of people end up subscribing to it because they don't want to pay Rolls-Royce prices for a Rolls-Royce service, this thing is going to be a financial disaster - watch public opinion then."
I think the word "If" nullifies his whole argument, because that shows that Percy Allan himself is not sure whether the take up rate of NBN will be lower than expected. And if NBN has become popular as stated, then there is a very good reason to believe that the take up rate will be as expected.
So if the purpose of Percy Allan's report is to undermine the NBN project, it doesn't work with me.
Surprisingly, Herald Sun Business today has an article that is positive toward the NBN project under the headline "Experts say the Coalition must stomach the NBN".
It writes:
"THE National Broadband Network is now so far advanced that the Coalition will have little option but to push ahead with the project if it wins office next year, industry experts say.
Commonwealth Bank analysts say it will be too cumbersome and expensive to abandon the NBN after the next election.
It would take "years" for a viable alternative strategy to be developed and passed into law, meaning it is unlikely the project will be dropped, the analysts say.
"We are unconvinced the NBN will be cancelled," analyst Alice Bennett said in a note to investors."
To me it is surprising that Herald Sun (which is from the same stable as The Australian which has been very negative toward NBN) seem to tacitly support Alice Bennett's call for the Coalition to accept the NBN.
If it is the beginning of support to NBN from the conservative media, then I think it is a positive development for Telstra. The more support NBN gets from the conservative media the more likely the Coalition will continue NBN as it if it wins office. And if the Coalition (under pressure from the conservatives) declares that it will continue NBN as it is (the sooner the better), then Telstra will be relieved from the burden of uncertainties concerning its extra cash flow from the NBN deal and its business strategy that has been aligned to the NBN environment. And with no uncertainties weighing it down, Telstra share price will be at least $4.00 (that is considering that the deal itself is valued $1.67 per share by Goldman Sachs).
TLS Price at posting:
$3.35 Sentiment: Buy Disclosure: Held
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