NBN to render some of Macquarie Telecom's assets redundant

Macquarie Telecom says telcos must get used to the idea of their networks no longer being worth as much

Macquarie Telecom has conceded that some of its network assets will be made redundant by NBN Co’s build of the National Broadband Network (NBN).

Speaking at a media event for the launch of the Macquarie Telecom-commissioned Access Economics report, Australian Business Expectations for the National Broadband Network, Macquarie managing director, David Tudehope, said the NBN would build over some of the telco’s existing assets.

“Macquarie, like any telco, has existing assets, some of which will have a life beyond the NBN and others will be replaced by the NBN commercially,” he said.

“But we are quite comfortable at the end of the day that while there are swings and roundabouts, realistically you can’t have this sort of step-change investment in the country without the reality that some of your investments will not be of value going forward."

Tudehope would not comment on whether Macquarie was considering selling some of its assets to NBN Co, or directly address whether the ability to write off assets made redundant by the NBN would be commercially advantageous to the company.

On the issue of compensation for telecommunications companies affected by the rollout of the NBN, Tudehope suggested many providers would have to get used to the idea of receiving payouts less than they might hope for.

“A lot of telcos who argue their infrastructure investment is worth a lot of money [base it] on the price on the day they were built 10 years ago as opposed to what the value might be today.

“The reality is that if you invested some money over the last 18 years of competition I guess you always think it is worth what you paid for it, but the reality is that industries changes,” he said. “The reality is that a lot of that investment is quite old now but I guess the government will work that out.”

As reported by Computerworld Australia, opposition communications minister Malcolm Turnbull claimed in early November that NBN Co’s plan to limit the number of points of interconnect (PoI) on its network would “strand” hundreds of millions of dollars of existing private investment in fibre links, prompting telcos to demand compensation.

Macquarie Telecom and the NBN

Tudehope said there were no direct benefits of the NBN to Macquarie Telecom itself, however the national network would “level the playing field” and increase competition for the entire industry.

“We [will] all buy off the NBN and that’s a healthy thing,” he said. “It removes that vertical integration of Telstra which is the most vertically integrated incumbent in the Western world, so clearly there is a plus there as well."

Discussing the impact of the NBN on hosting, Tudehope said the trend of organisations moving their computing into their central data centres would pick up pace.

“We think that trend will accelerate because quite simply now you can have all your computers sitting in your central office because the speeds between a central data centre, hosted service and branches will be as if they were all in the same building,” he said.

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