Telstra CEO, David Thodey, has used his opening address to push the company’s case for postponing the Federal Government’s Telstra separation bill until next year.
Speaking to investors, Thodey said the range of government departments from which approval was required, the complexity of the Telstra separation and the competing demands of article words negotiations meant the government’s intention to pass the legislation by Christmas was unrealistic.
“The government is very keen to pass this legislation before they rise in early December,” Thodey said. “The minister is [also] very keen to have some understanding on the [NBN] opportunities but this time frame is very aggressive as there is an enormous amount of work to do.”
Thodey told shareholders that the range of issues involved in structurally separating the company were far more complex than Telstra had imagined upon entering into negotiations with the government. They involve issues around deployment, migration, legislation and regulation.
Deployment issues included agreeing on the range of access services Telstra may or may not supply to NBN Co, the mutual services both companies may supply, the operation and maintainance services Telstra may provide to NBN Co, structural and functional separation options and the coverage options for 10 per cent of Australia not covered by fibre to the home.
Migration issues included management approaches to the volume of migrations carried out on any one day, access to premises, service continuity, IT systems and customer services exit requirements.
Legislation and regulation issues included seeking approval of any proposal from the department of Finance, Treasury, the Department of broadband and the digital economy and the ACCC. Other issues included universal service obligations, customer service guarantees, network reliability frameworks and mass service disruptions.
“Our belief is that the current bill should be deferred until the current constructive negotiations with the government and NBN Co are concluded so that the government can put a bill to the senate that covers off all the options — ie you need to see the NBN legislation and you need to see the NBN implementation study,” he said.
“There are a number of things we are unable to make any recommendation to the board on until we understand all these factors. If we can’t make a recommendation to the board then we definitely can’t take anything to our shareholders.”
Thodey added that related issue of seeking shareholder approval for structural separation was complicated by ASX listing rulings, however the company board’s position was to seek shareholder approval.
“The board’s current position around seeking shareholder approval: If the board proposes a substantial change to the nature or scale of Telstra business in connection with the NBN, subject to the required regulatory approval, the board intends to seek shareholder approval,” he said.