Incumbent Telstra has signed a A$11bn (US$11.6bn) deal to rent out space on its fibre network as a part of the country’s National Broadband Network (NBN) plan.
The deal was agreed with the Australian government and NBN Co, the wholesale company that the…
Incumbent Telstra has signed a A$11bn (US$11.6bn) deal to rent out space on its fibre network as a part of the country’s National Broadband Network (NBN) plan.
The deal was agreed with the Australian government and NBN Co, the wholesale company that the government has created to implement the NBN.
In a statement today, Telstra said it would provide access to certain infrastructure, including its dark fibre, exchange space, lead-in conduits and ducts.
The infrastructure agreement will last for 35 to 40 years from the date of commencement. Telstra will be paid A$11bn over “a number of years”, rather than in an upfront payment.
The NBN programme aims to bring universal broadband internet using a mix of fibre, wireless and satellite technology.
As a part of the development of NBN, Telstra has agreed to a structural separation, which will see NBN Co. take over the customer services on its copper network.
In its statement today, Telstra confirmed that it would disconnect its copper-based customer access network, as well as the broadband services on its Hybrid Fibre Coaxial (HFC) cable system, that are provided to premises within the reach of the NBN fibre network.
These Telstra services will be migrated to NBN-based services over the ten-year build-out of the NBN network.
Telstra said it expects to incur A$2bn (US$2.1bn) of costs during the course of the agreement, due to fees incurred by migrating customers to the new network and maintaining infrastructure.
It argued that the agreement would produce a net result “that is superior to other options realistically available to the company”.
The deal is still subject to approval from Telstra’s shareholders and the telecoms regulator, the ACCC.
Telstra’s chairman, Catherine Livingstone, said that the government’s commitment to the NBN programme and other policy changes meant that the Telstra board had to decide whether the company should participate in the NBN rollout or pursue different options.
Livingstone said: “The decision to participate was made on the basis that the proposed transaction is expected to provide us with the ability to recover more value for the business than the available alternatives, given the loss of value after the NBN policy announcements.”
Telstra was advised by Macquarie Bank, UBS and the private equity firm Gresham on the transaction. Its legal advisers were Mallesons and Gilbert & Tobin.
Similar A$800m deal with Optus
Separately, NBN Co has also signed a A$800m (US$841m) agreement with local mobile operator Optus to migrate its own HFC customers to the NBN.
Optus appeared more positive about the agreement than Telstra.
The company’s CEO, Paul O’Sullivan, said that this represented “a fair deal” for Optus.
“This deal supports the NBN to create a level playing field for all telcos. Australian consumers will be the winners,” he added.
Optus is owned by the Singaporean mobile operator Singtel.
