Wednesday, February 9, 2011

Telstra Finalizes Terms of National Broadband Network Deal

As part of its quarterly financial report, Telstra provided an update on negotiations with NBN Co. concerning the National Broadband Network. Key commercial terms of the deal have been now been finalized. NBN Co. would gain access to Telstra facilities and there would be a progressive migration of Telstra traffic onto the National Broadband Network. The deal is expected to deliver approximately $9 billion in post-tax net present value to Telstra.

Telstra has provisionally agreed commercial terms relating to copper network decommissioning, dark fibre and duct usage, exchange usage, certain roll-out arrangements and other matters with NBN Co. The parties are working to complete the associated operational details and ensure all contingencies are addressed as part of the documentation process which is expected to be completed in the near future.

In addition, Telstra's CEO confirmed that the company had reached in-principle agreement with the Federal Government over the specific measures that are expected to deliver a further approximately $2 billion in post-tax net present value. The total post-tax net present value of the transaction is approximately $11 billion.

"This important milestone represents substantial progress. During the last eight months we have negotiated constructively over a range of extremely complex matters," Mr Thodey said.

Detailed information on the NBN Co. has not yet been made public, but the company hopes to do so shortly and to put the proposal to shareholders with a target date of 1 July 2011.

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