Telstra, NBN Co ordered back to court in March

More than $100 million at stake in contract dispute
Telstra, NBN Co ordered back to court in March

The NSW Supreme Court has put off an argument between Telstra and NBN Co until the second quarter of next year.

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.

Specifically, the parties seek to clarify when consumer-price-index (CPI) adjustments apply to the price that Telstra charges NBN Co to access its infrastructure.

At the court this morning, Justice David Hammerschlag decided to stand over the directions hearing until 28 March. When the parties return on that date, Hammerschlag said he would “quickly” set a hearing date, so long as the parties had everything ready to go.

Today was the second time the directions hearing has been stood over.

Attorneys for the parties estimated that the hearing—when it does begin—will take three days.

The agreement between Telstra and NBN Co 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 renegotiation of the deal with NBN Co, "although resolving this disagreement will help provide greater certainty and as such may assist future policy discussions".

NBN Co yesterday released its strategic review of the NBN, which recommended renegotiation of the Telstra contract to allow for a multi-technology approach replacing the existing fibre-to-the-premise scheme chosen by the Labor party.

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

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