Telstra finalises $11b deal with NBN Co

The finalised agreements mark three years of negotiations between the telco and the Federal Government

Telstra has finalised its $11 billion definitive agreements with NBN Co, giving the final go-ahead for the telco’s structural separation and use of its network assets in the National Broadband Network (NBN).

The agreements were set out back in June after two years of negotiations with the Federal Government, with Telstra shareholders voting unanimously in favour of the deal in October.

Telstra chief executive, David Thodey, said the finalised agreements now brought into effect the telco’s Structural Separation Undertaking (SSU) and draft migration plan which were approved by the Australian Competition and Consumer Commission (ACCC) in February.

“Today we have concluded almost three years of intense and complex negotiations, with multiple parties, and we are very pleased we have delivered this positive outcome for our customers, employees and shareholders,” Thodey said in a statement.

“The Minister has made decisions that enable Telstra to retain ownership of our HFC [hybrid fibre-coaxial] network and our share in FOXTEL, which along with ACCC approval of the final Migration Plan, were pre-conditions to the SSU coming into force.”

A spokesperson from NBN Co said the finalised agreements paved the way for the fibre network rollout. “Today we have cemented the arrangements with Telstra that will enable the efficient re-use of Telstra’s existing infrastructure as we undertake the orderly migration of fixed telecommunications services from the copper of today to the fibre of the future,” the NBN Co spokesperson said.

Thodey also said in a statement that the agreements would “contribute to free cash flow generated in the medium term, provide us with greater financial flexibility and a stronger balance sheet, and help to offset the decline in free cash flow expected as customers migrate onto the NBN.”

Telstra recently signed on to NBN Co’s wholesale broadband agreement (WBA) — the last of the major telcos to do so — in order to sell its services over the NBN. The WBA is the 12-month contract governing ISPs selling commercial services over the fibre network.

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