Court to hear Telstra, NBN Co dispute next month

$100 million is estimated to be at stake

Telstra and NBN Co are headed back to the NSW Supreme Court on December 13 after a directions hearing was held this morning presided over by Justice David Hammerschlag.

The two organisations are in dispute over when consumer-price-index (CPI) adjustments apply to the price that Telstra charges NBN Co to access its infrastructure.

The dispute relates to the $11 billion agreement in which Telstra agreed to migrate its customers to the NBN and decommission its copper network, as well as allow NBN Co access to its pits, pipes and ducts.

The agreement allowed for CPI increases from the first of January every year after the commencement of the agreement. However, Telstra and NBN Co have disagreed over the precise date that the agreement commenced.

The agreement was signed in June 2011, so Telstra argues that CPI increases should take effect from 1 Jan 2012. However, NBN Co argues that the agreements were only finalised in March 2012, and so the CPI start date should be 1 Jan 2013.

The difference, depending on when CPI adjustments began, is estimated to be worth more than $100 million.

An attempt at mediation between the parties failed, resulting in Telstra taking NBN Co to court.

Telstra has said that the timing of the court action is unrelated to possible renegotitation of the deal with NBN Co, "although resolving this disagreement will help provide greater certainty and as such may assist future policy discussions."

The government has commissioned a 60-day review of NBN Co, which will include analysis of the progress and cost of the NBN rollout and NBN Co’s financial and operational status. The review is due for submission to the government for consideration by December 2.

The government plans to detail its new plan in a statement of expectations that will be released after the review is completed. The Coalition issued an interim statement of expectations last month to provide construction and operating guidance to the NBN Co during the audit.

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