The nation’s largest telco Telstra this morning revealed it had been forced to delay a vote to be put to shareholders regarding whether it should go ahead with its $11 billion deal to transfer customers onto the National Broadband Network as the new fibre monopoly rolls out its infrastructure around the nation.
Telstra had previously been planning to put the deal to a mass shareholder vote – but although claiming progress on the talks, this morning the telco said the timing would be delayed.
“The NBN negotiations continue to progress well, with all parties working together to agree and document the various detailed arrangements required to implement a transaction of this scale and complexity,” the company said in a statement to the Australian Securities Exchange. “A number of matters are yet to be finalised, including some that require government approval.”
“Work continues to read final agreement as soon as possible. However, there are statutory timeframes required for the necessary ministerial, ACCC and Telstra extraordinary general meeting processes which mean there is a minimum timeframe from the time the agreements are finalised to when a shareholder vote can occur. Given this, we have now reached a point where a 1 July meeting is no longer practicable.”
Telstra said it was currently looking at options for an alternative date – including considerations around its full-year results announcement – and would let shareholders know when it could set a date.
The news comes despite the fact that parliamentary progress is being made on key pieces of legislation associated with the NBN, and little more than a month after Telstra chief executive David Thodey said the telco had finalised a set of “key commercial terms” with NBN Co. It also comes more than six months after Telstra signed a non-binding heads of agreement with NBN Co, setting the framework for the detailed discussions to follow.
Overall, the deal with NBN Co will deliver Telstra a post-tax payment of about $11 billion, including recompense for decommissioning its copper network and stopping the provision of broadband over its HFC cable network. It also includes access to Telstra infrastructure such as ducts, so that NBN Co can roll out its fibre network around Australia.
In addition, Telstra customers will progressively have their fixed line connections (but not their mobile links) shifted onto the NBN network – although Telstra will continue to use its HFC cable network to deliver pay TV through its FOXTEL joint venture.
Rival Optus has repeatedly called for the full details of Telstra’s deal with NBN Co to be made public. “Telstra shareholders should have the right to sign off on that deal, but so should all Australians,” said Optus chief executive Paul O’Sullivan several weeks ago.
Image credit: Les Powell, royalty free
I doubt if this is anything other than a short delay.
If anything, it’s probably by Telstra design to get the government to hurry along a bit quicker. Given the government’s keenness to move on with this, it’ll probably be a sufficient kick in the pants.
I hope you’re right. Every time I read the word delay next to NBN I groan. It feels like there are new roadblocks appearing all the time.
We need as much of the NBN rolled out as possible before the next election. Then there’s less chance of the Liberal party destroying it if they come to power.
I hope I am right too. I could easily be wrong.
July 1 – (the original date) – is still a long way away – (3.5 months) – so there is plenty of time to sort things through. Contractual negotiations – particular one as large and complex as this – always get a bit stuck on the last few points, as both sides try to squeeze the last little bit out of it for themselves.
This is another delay and NBN can ill aford to have more delays with the amount of Staff and overheads they have and no work happening.This is another reason their will be very few contractors left in the industry to do there rollout already 5 months behind schedule.NBN need to release work and stop being so indecisive.This has helped our company make a decision and get out of the industry and into other areas of the constructiopn industry.It will be interesting to see what other companies do.
Um … I don’t think NBN Co is being indecisive. I think the simple fact of the matter is that the contract with Telstra is incredibly complicated and will require multiple rounds of lawyers to get through — and when I say multiple, I expect it to be in the hundreds.
It seems dodgy that Telstra are being paid to remove the broadband line from HFC to the NBN but still keep their Foxtel customers on it. There may be implications for the NBN if people want Foxtel for its exclusive content and have to make a choice between NBN and HFC on the basis of limited income.
Is there a technical impediment that would prevent Foxtel from being delivered via the NBN.
1. Yes, it seems dodgy to me as well — I agree with Malcolm Turnbull on this one.
2. No, there is no technical impediment, FOXTEL is currently being delivered over existing broadband networks and I would expect it to be on the NBN for sure.
I see it as a tradeoff – the HFC cable was/is bloody expensive.
If they spend $20K running the cable down a street, and nobody on that street ever connects to it, that’s $20K blown. The return on that infrastructure is thin, and that’s why they and Optus both stopped rollout of the cable.
Once the NBN is completed, I would suspect that all Foxtel will be on NBN in multicast format, and the HFC would be shutdown.
Telstra have recently spent money on it – and I guess it’s just part of the deal to get some return on that recent investment.
That doesnt really explain why they would keep the HFC going for Foxtel only whilst converting broadband customers to the NBN, in fact it would count against them doing so.
Telstra must see some financial reason for the split, maybe higher profit margins on the HFC. The cynical side of me thinks Telstra are hoping to sell those customers in the future should NBNCo needs the subscribers to obtain their required quotas.
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