NBN Co-Telstra deal due by Christmas

Telstra shareholders to receive NBN Co deal by mid-2011

Telstra chief financial officer and executive director, John Stanhope.

Telstra chief financial officer and executive director, John Stanhope.

Negotiations between Telstra and the NBN Co have a long way to go before the telco can recommend a final deal for the separation of the company to its shareholders, according to Telstra chief financial officer and executive director, John Stanhope.

Read more on Telstra's 2010 AGM

Despite this, the telco was confident it could bring a draft 'Definitive Agreements' to a shareholder vote “by the middle of next year”.

Speaking at Telstra's annual general meeting in Melbourne, Stanhope said important cornerstones of an agreement were still being developed.

“A number of things need to happen before we can even consider recommending a deal to you, our shareholders,” Stanhope said. “These pre-conditions include a number of pieces of legislation, some of which have been introduced to parliament.”

Stanhope said regulated pricing stability was one pre-condition that had to date been met by the NBN Co, as was ACCC approval, and an independent review of agreements made between the NBN Co and Telstra.

According to Stanhope, the $11 billion promised to Telstra by NBN Co would be received over the course of many years.

“Of the $11 billion valuation, around $9 billion relates to fair considerations for decommissioning our copper and cable broadband network, and agreement for NBN Co to pay for access to Telstra’s infrastructure over a 30 year period,” he said.

“The remaining $2 billion is the value to Telstra of the Government’s commitments to policy changes which will reduce certain costs, primarily for the Universal Service Obligation.”

While the timing of a definitive deal with NBN Co “remains uncertain” with the political process potentially taking months, Telstra would seek to finalise the draft definitive agreements with NBN Co "by Christmas”.

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