Tuesday, October 11, 2011

Telstra Shareholder to Vote Tuesday on NBN Decommissioning Course


Shareholders in Telstra are expected to vote on Tuesday on the historic pact with the Australian government regarding Telstra's role in the National Broadband Network.

Telstra's Structural Separation Undertaking (SSU) and Migration Plan has two components:
  • it commits Telstra to structural separation by 1 July 2018. This will occur through the progressive disconnection of fixed voice and broadband services on Telstra's copper and HFC networks, and subsequent migration of these services onto the NBN;
  • it sets out the various measures which Telstra will put in place to provide for transparency and equivalence in the supply of regulated services to its wholesale customers during the transition to the NBN.
The deal provides Telstra with replacement revenue, through disconnection payments as the rollout of the NBN occurs, and new revenues, through access payments for the use of Telstra's infrastructure over an assumed average 30 year period. Telstra estimates the value of this arrangement at approximately AUS $11 billion in post-tax net present value over their long-term life. http://www.telstra.com 16-Oct-11
As announced in June 2011, the deal between Telstra and the Australian government provide for the decommission of the Telstra copper network and eventual migration of traffic onto the new fibre infrastructure.
  • Telstra has agreed to disconnect, progressively, copper-based Customer Access Network services and broadband services on its HFC cable network (but not Pay TV services on the HFC) that are provided to premises in the NBN fibre footprint, and will migrate its services onto NBN-based services, over the expected 10 year build period of the NBN;
  • Telstra will provide NBN Co with large scale access to certain infrastructure – dark fibre, exchange space, lead-in-conduits and ducts - at prices based on committed large volume levels of usage and availability. The term of the infrastructure agreement will be between 35 and 40 years (the precise term depends on a number of factors including NBN Co's rollout schedule) from commencement, plus two 10 year options to extend exercisable by NBN Co.
  • The infrastructure will be taken over the course of the NBN rollout and payments made for an assumed average period of 30 years. In order to maximise the availability of this infrastructure, Telstra will undertake necessary work on the infrastructure. Telstra retains ownership of all infrastructure assets, except for those lead-in-conduits used by NBN Co which will become NBN Co property once used;
  • The Government has agreed to a package which includes increased funding for the delivery of the Universal Service Obligation (USO), clarification of Telstra's USO responsibilities for the supply of infrastructure in new developments in the NBN environment, and the avoidance of certain costs to Telstra through various funding measures such as funding of a public information campaign, and for employee retraining; and
  • Telstra and NBN Co have also agreed to key product feature and price commitments relating to NBN Co's basic voice and data offering. These will be addressed in NBN Co's full product terms, which remain subject to further development and industry consultation.

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