Singtel (ASX: SGT) subsidiary, Optus, has reached an $800m agreement with the NBN Co for the migration of its hybrid coaxial cable (HFC) customers to the National Broadband Network (NBN).
The agreement will involve steady payments to Optus for its migrating customers to the NBN as and when the service becomes available in areas currently serviced by Optus’ HFC service.
The initial migration is expected to commence in 2014 and will take up to four years to complete.
Optus chief executive, Paul O’Sullivan, said the deal would promote competition in the telecommunications sector and also represented value for shareholders.
“This agreement represents a fair deal for Optus,” he said in an ASX statement. “We intend to use the NBN to turbo-chare competition and to deliver the full potential of a 21st century digital life to customers.” The deal is conditional on Australian Consumer and Competition Commission (ACCC) approval and “satisfactory rulings” from the Australian Taxation Office (ATO).
The announcement is the second of two major NBN announcements today aimed at solidifying the NBN Co’s position in the market.
Earlier today Telstra announced it, the Federal Government and the NBN Co have come to definitive agreements on the structural separation of Telstra and the use of its network assets in the National Broadband Network (NBN).
The agreements, which need the approval of a majority of Telstra shareholders at the telco’s 18 October annual general meeting, hinge on the Australian Consumer and Competition Commissions’ (ACCC) acceptance of Telstra’s structural separation undertaking and approval of its migration plan.
According the office of the communications minister, Senator Stephen Conroy, the agreement to migrate Optus' HFC customers to the NBN and to decommission its HFC network would provide greater certainty about NBN Co’s revenue, and would further increase the take‑up of NBN services.
"NBN Co’s agreement with Optus is also recognition that the NBN would create a level playing field for fixed services that has the potential to bring about real benefits for customers," a statement from the office reads.
"To support the Optus and NBN Co Agreement, the Government has provided NBN Co with a funding agreement to enable it to enter into substantial commitments with Optus and Telstra. The Government has also provided a guarantee to Optus in respect of NBN Co’s financial commitment to it."
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