NBN Co Legislation could increase separation costs: Telstra

Draft Legislation could also turn NBN Co into a retail and wholesale outfit, Telstra claims

Telstra has warned that the NBN Co Exposure Draft Legislation, if enacted, may dramatically raise the price of any compensation the Federal Government may need to pay as a consequence of splitting the company.

In a letter to shareholders, CEO David Thodey and Chairman Catherine Livingstone wrote that the draft legislation, released on 24 February, raised for the first time the prospect of NBN Co becoming a Government funded retailer, in addition to a wholesale network.

“Such an outcome would run counter to the core purpose of the NBN and the Government’s primary policy objective of restructuring the industry to have separate providers for retail and wholesale fixed network services,” the letter reads.

“We are very concerned about this potential change in the Government’s position. If enacted we would need to factor this into the financial consideration required to achieve an agreement that is in the company’s and your best interests.”

Thodey and Livingstone added that the company’s position on the Telecommunications Legislation Amendment (competition and Consumer Safeguards) Bill 2009 – due to be debated in the senate in the second or third week of March – also remained unchanged.

“While we support the Government’s National Broadband Network 9NBN) vision and sensible reforms for our industry, we have always said the legislation is likely to destroy shareholder value and makes an agreement with NBN Co and the Government harder to achieve,” the letter reads.

There were also several “complex issues” about which the company awaited clarification from the Government and NBN Co, however the company remained “engaged” with the Government and NBN Co, Thodey and Livingstone wrote.

The Draft legislation is available online.

Submissions can be made on the Legislation until March 15.

Communications Minister Stephen Conroy’s office was contacted for comment, but did not immediately respond.

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