Updated: Telstra apathetic on NBN report

Study says cash investment or no deal

Telstra (ASX: TLS) has provided an apathetic response to a report that claims it is not required for the success of the National Broadband Network (NBN), although it said it will look into its findings.

The McKinsey-KPMG NBN Implementation Study recommends the Federal Government should retain full ownership of the NBN Company until the roll-out is complete, and not offer equity in return for vended-in assets.

The recommendation could increase the likelihood of a cash deal between Telstra and the Federal Government which are engaged in negotiations regarding the use of the telcos assets in the NBN. The Federal Government said it wants Telstra to structurally separate and if the telco giant won't do so voluntarily, the Rudd administration will use regulation to achieve the goal.

When originally contacted a Telstra spokesman told Computerworld Australia the telco's response would not be worth publishing, but said in a written statement that it is "interested in [the report's] findings and will consider them in detail”.

Federal Communications Minister Stephen Conroy would not comment on the state of negotiations, saying he will “not provide a rolling commentary”.

“The implementation study also confirms that while infrastructure sharing and other commercial arrangements with existing telecommunications companies can benefit the project, the NBN will be financially viable even without the participation of Telstra,” Conroy said.

“The NBNCo says it will cost x dollars for the fibre, and Telstra has its own value — clearly there is a difference.

“We are in lengthy and complex negotiations and if both parties feel there is no point… we will shake hands and walk away,” he said, adding he “wouldn’t want” the discussions to go past June.

Conroy confirmed the Telstra separation Bill will be introduced Wednesday, and told a press gallery the "Bill deals with the existing structure of the market today… and gives new powers to the ACCC to try and deal with some of the problems this sector has had endemically”.

The $25 million study reports the NBN can be implemented within the original $43 billion estimate of capital expenditure and claims the peak government funding requirement will be about $26 billion in year six of the NBN project. “This would be a temporary funding need since subsequent to this peak, NBN Co is expected to be able to support private sector debt of up to $32 billion by year 15,” the study reads.

Some analysts have painted a rosy picture for Telstra in the event of a split. RBS analyst Ian Martin said the “worst case outcome” for Telstra will mean they will compete with the NBN Co — which could become a retailer under proposed legislation — but would enjoy “very good growth in other parts of [its] business”.

Listen to the full speech by Senator Stephen Conroy and Senator Lindsay Tanner

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More about: ACCC, Bill, etwork, Federal Government, KPMG, Telstra
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Comments

Noel Peters

1

From the Government that brougt you "The Insulation Scheme" that wrecked an industry, The Collins Class Submarines (Kim Beasley) that wrecked the Defence Forces, we now have the NBN that will wreck our telecommunications industry. In 50 years I have never seen a Government damage this country so much. And they present a doctored report to put their NBN case.

RS

2

From Telstra who received a vested PSTN in 1992 and have pocketed $b's ever since and who brought us, the botched NBN bid.

Previous to that a FTTN proposal including demands for maximum ROI and a brand new monopoly... or else.

Gave us a refusal to switch on ADSL2+ and of course broke the law by refusing to allow access to the PSTN...

Yet another whinge (doctored report, lol) via yet another burned shareholder, who blames the government instead of himself, for the purschase of those worthless Telstra shares, lol...

D Newman

3

@RS Amen to that.....
@Noel Peters we have been saying for months this is roughly what the report will say, we also said the writing was on the wall for Telstra years ago, and anyone that didnt dump their shares after they released their new vision statement a few years ago was living in a rather delude bubble...

We have on this site warned for years a reckoning was coming to Telstra because of its practises of infrastructure bleeding and bad house keeping practises, if you hold share its up to YOU to keep an eye on trends, and 2 years ago BIG bells were already sounding to start selling up, most of our group did.

Also the pricing models and returns on the NBN were withing expected ranges, which means Telstra no matter what is being backed into a corner, and still Abbott will not come out with a counter policy other than the usual BOO BOOO the skies falling, I rather give my support to a group that tries, than a group that whinges and produces nothing.

And to end with your amazing statement that flies in the face of predictions in the industry...." we now have the NBN that will wreck our telecommunications industry."........Surely that should read..... "we now have the NBN that will CHANGE our telecommunications industry"..and your scared and worried, but it certainly isnt about returns on investment or the GDP increase thats been predicted and observed in other countries that have done this......I would say the last 50 years have been rather blinkered, if this is the worst you have seen a government do.

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