blog Posting this one by popular request from quite a few readers who apparently want to debate it. According to The Australian newspaper, which has apparently garnered an interview with Telstra chief executive David Thodey on the sidelines of the Mobile World Congress conference in Barcelona, Thodey has already started playing hardball with respect to the $11 billion in payments which Telstra is set to receive as part of its deal with the Government and NBN Co. The newspaper reports (we recommend you click here for the full, paywalled article):
“Telstra chief executive David Thodey has ruled out renegotiating the $11 billion bounty the telco giant will be paid to lease its assets and migrate on to the National Broadband Network in the event of a Coalition election victory in September.”
To be honest, I’ve been holding off on linking to this because I believe Thodey’s comments to be broadly … a whole bunch of bullshit. Is Telstra really saying that if the Coalition wants to drastically alter Telstra’s involvement in the NBN, shifting from a FTTP to a FTTN model and reusing Telstra’s HFC network, that Telstra will demand the exact same price for a completely different setup?
That just seems ridiculous … and I really highly doubt that any Government would put up with that. In my view, this is just the first opening gambit from Thodey, to signal that no matter what happens, Telstra is going to want a similar amount of cold, hard cash (and don’t forget that money has already started flowing to Telstra, it was detailed in its recent financial results) from the NBN project. It’s good to start aiming high. But I highly doubt that the end result of a Coalition Government will be the same $11 billion payment to the big T. Different deal, different price. That’s just basic business sense.
One strongly suspects, of course, that there are already provisions in the gargantuan agreement between Telstra and NBN Co for precisely this kind of situation. However, it’s a little hard to know for sure, given that the Government has blocked the contract from being released publicly, despite the best attempts of Internode founder Simon Hackett. In any case, I doubt Thodey’s pledge this week will stand the test of time.
Image credit: Telstra
“That just seems ridiculous … and I really highly doubt that any Government would put up with that.”
Indeed…
$11 billion to lease the ducts plus $15 billion for the copper!
May as well just build the fibre to the home…
The only camp thats going to piss away our money on the NBN will be the liberals.
So does this mean the Coalition will have to buy the CAN, which will mean the supposed cost savings of FTTN will be non existent in terms of total CAPEX spent? Well doneTurnbull.
I think this makes a great deal of sense- FTTN requires more of the CAN, Telstra would be silly to not hold out for more money. They are in the perfect bargaining position!
I think Telstra will be in a very strong position if the LNP win the election. They know that the LNP ran on a policy of using Telstra’s copper and that there’s virtually no way (short of a major policy backflip) that the LNP can deliver without their copper.
They will charge an absolute arm and a leg, just because they can. This is Telstra after all.
By LAW they must put their shreholders interests first, if they failed to deliver the best result for their shareholders they can be sued by said shareholders.
No difference in leasing of pits and ducts etc as the copper uses their ducting and pits etc, we now come to the vaue of the copper which is OWNED by Telstra’s shareholders.
A) Either lease it off Telstra with them responsible to make fit for purpose and maintain, connect etc. – That considering the state of the Copper Network would be big dollars or the shareholders would justifyably be upset
B) LNP have NBN Co buy the copper and be responsible for making it fit for purpose and maintain etc. Possibly contract Telstra for maintenance and refurbishment or buy the whole copper install/maintenance section.
Massive cost and ongoing OPEX
If they are determined to do thing their way and to hell with the country’s best interests, they will lease the copper because that has the lowest capex. They will then be able to say “see, see, told you we could do it cheaper”; and when anyone points to the ridiculously high opex and the resultant high prices to the end user they will say “Labor’s NBN was always going to go up to these prices and anyone who disagrees is “
Seems the comments here filter out pointy brackets, that last quote was meant to end with (insert thinly-veiled intelligence insult here)
What Thodey seems to be saying is Telstra bought all the infrastructure from the Government when they were privatised. That includes every building, wire, duct and other bit of equipment. If you want to take that away from us then you are going to have to pay us. If you take our wholesale business away then you are going to have to pay for the loss of that business as well.
We know that transferring its customers to another wholesale provider (NBN) is worth $5B The long term lease of infrastructure is $4B the extra $2B is the savings in no longer being responsible for the Universal Acceess Services.
The difference between FTTP and FTTN is that the copper tail to the house is going to be needed for the latter and at the moment that doesn’t appear to be in what NBN Co is paying Telstra. It would seem that with FTTN an additional amount would need to be paid to Telstra leasing or buying the copper.
Renai is right in saying that what Telstra will be looking for wont be the $11B already negotiated. They will be looking to ensure they are compensated properly for every asset that is taken from them to enable the Coalition FTTP scheme to occur. What they will be chasing in dollars remains to be seen. It could take another twelve months of negotiations just to reach a price.
My thought is that Telstra would be looking for additional compensation if the FTTN scheme is adopted. It should be noted however that there will be a saving in not having to run the fibre or other gear to premises to offset this cost. I have no idea what those figures are likely to be.
I think Renai, the Government (assuming it’s the Coalition) will be in a VERY tight bargaining situation here. I think, in fact, it will cost them MORE overall to Telstra to do this. That’s after wide reading and guesstimates, not evidence.
However, Telstra aren’t going to accept less VALUE is what Thodey has said. That doesn’t mean they won’t accept less CASH for further revenue possibilities- ie keeping the HFC on and earning via wholesale (as one example). But the regulatory hurdles are going to be the stickler.
If Turnbull thinks this is going to be an easy renegotiation, even IF they end up paying less overall….he’s smoking the wrong happy flowers….
Absolutely, sev. Telstra is holding all the strong cards in this negotiation.
One of the strongest – all the more so because it is hidden – is TIME.
Telstra can, by cooperating or dragging their heels, make the rollout of FTTN fast or slow. We all saw how they took the negotiations with Labor and the current NBN Co to the eleventh hour.
If there’s one thing Turnbull has consistently pledged, it’s speed. Yes, a lot of what he’s said about FTTN being automagically quicker is codswallop. But it is all premised on a firm promise that the rollout will be faster.
[As an aside, the only thing he needs to do to provide a faster rollout is to sit back and wait. The ramp-up to high speed fibre rollout will take place over the next 12 months – just in time for the Coalition to take credit for it, grrr.]
But my favourite working theory at the moment is that somehow Telstra will do a back room deal to take over the NBN Co assets for a bargain price and continue the FTTP rollout – but on Thodey’s terms, and under a regulatory holiday.
I have always said Telstra is smarter than these pollies, they will get their unassailable monopoly back , competition will be in actuality destroyed with “competitors” relegated to resellers, screw Australia well and truly.
But all is well Telstra shares will be above $9.00
The question is if the Coalition is party to screwing over Australia’s future
Actually, thinking about it, who will own the copper in a FTTN solution? Who will pay for maintenance of the copper?
If NBN Co buy the copper, they will expect it to be of sufficient quality to be able to deliver the NBNLite to customers. I’d imagine that quite a bit will need to be upgraded, adding to the price Telstra will ask.
If Telstra retain ownership of the copper, they will have to maintain it at considerable expense. I expect Telstra to charge quite a lot for that.
And NBN Co still will need access to the ducts in a FTTN solution, and probably almost as much ducting as with a FTTH solution.
Telstra will retain ownership of the CAN until such time as it is sold.
FTTH sidesteps the issue by simply replacing it. FTTN is reliant on the CAN. Either NBNco has to acquire it from Telstra or lease access to it. The only other alternative is that Telstra become the replacement for NBNco.
This is the elephant in the room for FTTN. Telstra own the CAN. Turnbull is effectively screwed on policy because he requires their involvement.
Hardly surprising it’s AWOL.
Hang on Renai, I’m having difficulty with the double-dutch response here.
Thodey is ruling out re-negotiation of the current deal if the Coalition gains power. That’s not the same as saying they’d price the CAN the same.
It’s not even the same conversation.
Turnbull has been talking up how he’ll have a conversation with Telstra and all will be well. We all know that’s a crock of proverbial; Telstra has already accepted the existing deal and this response just strengthens that view.
Now Turnbull is suggesting he’d want to have a “conversation” with NBNco (presumably after he gleefully agitates to have Quigley sacked); clearly he’s already read the writing on the wall.
The fact he’d need to launch an entirely new process to negotiate a price for the CAN, to deploy FTTN has likely not escaped Turnbull, even if he flatly refuses to be drawn on it.
He has no choice. Because FTTN requires the last mile. Which Telstra still own. Catch 22?
“Is Telstra really saying that if the Coalition wants to drastically alter Telstra’s involvement in the NBN, shifting from a FTTP to a FTTN model and reusing Telstra’s HFC network, that Telstra will demand the exact same price for a completely different setup?”
I would expect it means that if a completely different setup is required then a completely different agreement will need to be made.
In other words, where NBNco wants access to pits and pipes, the existing agreement covers that.
If NBNco chooses NOT to roll out fiber where there is existing HFC then Telstra will NOT migrate customer and will NOT get paid for migrating customers.
If NBNco wants to chop up Telstra’s network and use it for FTTN then NBNco will need to negotiate a whole new agreement and whole new compensation package for access to teh copper which was never a part of the existing agreement.
I don’t think it requires a whole new re negotiation but rather a extension of the existing agreement.
The existing agreement already covers Telstra ducts and Telstra exchange buildings which are already being used to hold NBN Co equipment in a secure environment with air conditioning and power outage backup.
The extended agreement to use the Telstra shortened copper link in a FTTN scenario could be accommodated many ways including the NBN Co leasing the shortened copper links from Telstra, or Telstra having full ownership but receiving partial wholesale revenue.
And so the savings from FTTN start getting eaten up. In a few years with the extra maintenance that is required we will have paid the same as FTTH and will still have to pay for it eventually anyway.
If you just change the FTTH portion of the NBN to FTTN and some HFC upgrades there is only about $8b in the difference WITHOUT copper costs/charges/maintenance.
I am not sure what you mean by the ‘extra maintenance’ required, it is to easy to dismiss ALL the Telstra copper as 10 minutes away from turning to powder in the blood rush for a fibre push and yes some copper may have to be replaced to accommodate FTTN but then again much of it is ok as well.
Remember it is a shortened copper link not the long current line to the exchange via the pillar, I don’t think any of us have enough comparative information to say if you have to upgrade the copper in some situations for FTTN it is therefore much more economical to pull fibre through right into the residence for everyone in that area.
The copper has to last in many areas until 2023 anyway, that’s still a lot of Telstra copper maintenance and replacement still required in the meantime!
The maintenance that must be done on the copper. The fibre will be new and much more resiliant where as the copper is old, the pits full of water. They are only removing half to 2/3rd the copper, and leaving the worst half, the stuff just before the premises.
“The copper has to last in many areas until 2023 anyway”
That should be plenty. A FTTH upgrade should be needed way before then. I don’t see how you can’t see FTTN as a wasteful step being performed way too late. What’s the issue? Given a few years to roll out, exactly how much life can you see in copper and a bandwidth limited to at best 80Mb and in a lot of cases below 50Mb. Do you think the internet is just a fad?
No one here has any idea what must be done to the copper to bring it up to a FTTN standard, there is conjecture and it is only that the copper maintenance bill is so massive that there is only one course of action – FTTH.
The only reason FTTN won’t be viable is if Telstra states they are not really interested this far into the NBN rollout, with all their forward planning and budget estimates based on the $11b NBN deal already in place and approved by the board and the Telstra shareholders.
@alain
Even if Telstra DO say they’re not interested in FTTN (unlikely) the government (Coalition) can force them. It’s what Conroy did to get them to the negotiating table on the NBN in the first place. However, THIS time, Telstra have a SERIOUS case for the Federal Court if they were forced, because Telstra have a binding deal with NBNCo. to remove the use of their copper.
TBH, I have this niggling feeling Telstra don’t WANT to deal with the copper…
” THIS time, Telstra have a SERIOUS case for the Federal Court if they were forced, because Telstra have a binding deal with NBNCo. to remove the use of their copper.”
The FTTP rollout did not actually REQUIRE Telstra assets. Access to them made the job a lot easier and cheaper but it wasn’t NEEDED. Likewise, USE of it’s pits and conduits did not prevent Telstra from continuing to use them for it’s own purposes.
FTTN REQUIRES Telstra copper. In this case the constitution is VERY clear. Use of the copper for FTTN would render it useless for anything else. It amounts to a forced acquisition of property. Any individual action against Telstra to force it to hand over an asset it owns without “fair” compensation, the copper network, would be struck down without hesitation by the High Court as unconstitutional.
That isn’t the only reason. Yes, copper needs to be maintained, but also as speed needs increase it will not cope with future needs, it will be at it’s limit before 2020. Rolling out FTTN that has such a short life is a waste and that is why we should skip straight to FTTH.
The cold hard reality will be that regardless of the FTTN being inadequate by that time it will be practically impossible to upgrade to FTTH except possibly in limited high value areas due to the cost and imagine the scream by the media at junking all those expensive powered FTTC cabinets, unless they re use them and opt for a powered active FTTP, but still having to do the expensive run to the premises.
Realistically for the Nation as Essential National National Infrastructure it will never happen due to the very substantial cost, piecemeal would be even more expensive.
So whatever we get we will be stuck with for possibly the next 50-100 years
Telstra sharing the wholesale FttN/B revenue with NBNCo, might be a trigger for higher wholesale prices than NBNCo currently charge, or plan to charge.
“The extended agreement to use the Telstra shortened copper link in a FTTN scenario could be accommodated many ways including the NBN Co leasing the shortened copper links from Telstra, or Telstra having full ownership but receiving partial wholesale revenue.”
The carved up copper will not be suitable for POTS. Telstra will need to cut over each copper pair as and when required adding substantially to their costs. I expect they will want compensation for this.
If leased, they wll also want compensation for the billion or so dollars a year in ongoing maintenance costs to them that they factored into the current deal.
Presumably they will once again be required to be provider of last resort for USO so I expect they will wany compensation for this which was also factored into the current deal.
This would also mean that they would lose use of the copper for any other purposes which they are free t do at the moment whether that is simply recovering the copper and selling it as scrap or providing alternative non-ip uses (alarm systems, remote telemetry or whatever they may think of). I don’t really think they have a use for it in the pipeline, but this would eliminate that option and I would expect that they would want compensation for that.
I could go on, but you get the idea.
Best news I’ve read all day. Made my day yesterday when I read this, now it makes my day today.
Cheers Renai.
Everyone is forgetting that Turnbull is looking to use the HFC cables in most areas. not FTTN. So he will still pay $11B. for an even crappier asset.
He is a only looking at HFC areas as a lower priority to receive fibre than areas that do not have HFC.
But then Telstra might not be interested in that at all seeing a major part of the $11b deal is to only leave HFC up for Foxtel.
You have no evidence for this statement. On the subject Turnbull has been quoted as saying:
As Renai said, and I and much of his reader base will probably agree with him on this:
In other words, he hasn’t said they’re a “lower priority”, that implies he has committed to providing them with FTTN, he has on the other hand said that he will be building in other areas first and that he will only overbuild HFC areas depending on negotiations with Telstra.
We can only home that means weather or not he can rescind the $11b deal or part-thereof, the very deal that Thodey has said he won’t renegotiate, and also convince Telstra to make their HFC network an OAN as well as available to MDUs. A time-consuming and expensive exercise the brings into question the validity of his plan yet again.
Well as I have stated before the Coalition ‘get out of jail free’ card is being dependent on negotiations with Telstra.
This could mean anything from no HFC for BB to Telstra being not at all interested in keeping the copper maintained for FTTN and hanging onto their current $11b NBN deal with no change.
The Telstra NBN Co deal was ratified by the directors and approved by a shareholder vote, any substantial change to that agreement would require majority shareholder approval again.
Obviously shareholders and directors would need to be convinced any new Coalition NBN agreement is as good as or better for Telstra than the current agreement.
Big ask I would have thought.
See, here is the problem, we don’t want them to use that card. We have been subjected to market and policy uncertainty for too long now Alain. They shouldn’t rock the boat by drastically modifying the policy. If there are sayings or ways to reduce risk that don’t involve huge negotiations with Telstra, then maybe they should focus on those instead.
Like maybe conceding that the ROI is risky and giving NBNCo a direct subsidy (an on budget contribution) in order to reduce risk?
Unfortunately the Coalition have spent to long saying the policy is a bad policy and that means they’re stuck trying to ofter this solution that is increasingly looking like it won’t be achievable.
Well as I have stated before the Coalition ‘get out of jail free’ card is being dependent on negotiations with Telstra.
What jail are we talking about here? Reading the rest of your comment, it seems you’re implying that the Coalition will be able to use a breakdown of negotiations with Telstra as an excuse to continue with a largely FTTH NBN.
Is that what you’re saying?
Yes that is exactly what I am saying, the HFC and FTTN deal is totally dependent on Telstra co-operation to the fullest, also the ACCC would not look to kindly on any deal that increases Telstra’s already dominant market position.
I have always stated the Coalition FTTH rollout proportion of the whole will be much higher post a election win.
I don’t recall you ever saying that and I have been following your posts for quite a while.
The problem is Alain that the industry shouldn’t be subjected to uncertainty at the whim of Tony Abbott and Turnbull. They need to release a policy, and soon, so that Australian IT companies know what we’re in for if they win the election.
They have constantly refused to do this, so all we have is conjecture and rumours, which yes, we do engage in a lot you have been right to point out, but unfortunately for some of us the viability of our future business plans depends on knowing the outcome of this policy.
Saying that he might end up providing more Brownfields FTTP than we have previously estimated is just as much conjecture as saying that every contract signed after the election will be for FTTN.
We need a policy. No ifs ands or buts. Anyone who defends Turnbulls position is fighting a losing battle until we have that policy because they will be trying to basically guess.
HFC cables don’t cover most areas, only 30% of the population. What he said was he would complete the network in areas without HFC and then consider rolling out the network to areas with HFC.
Legally the Shareholders interest comes FIRST
I’m probably wrong, but my interpretation of Thodey’s comments is that any new deal will cost a coalition government substantially more than the present 11 billion. From Telstra’s perspective this is perfectly reasonable, because the coalition’s policy requires the copper network remain in use (for a currently unspecified period of time), rather than planning for its eventual shutdown, in addition to access to pits and ducts and the migration of Telstra’s customers.
I wish Thodey had just bluntly said “If the Coalition wants to do FTTN, it’ll cost them. A lot.” That’d really kill Turnbull’s claim that his policy is cheaper.
Just a thought, and others would know better than I. But if Telstra have been letting maintenance on ducts etc slide, and they have a responsibility to upkeep etc, then wouldn’t getting $11 billion, and then getting rid of an aging tech that they were going to have to address soon(even if it would be with govt help) actually be really good for them?
Essentially they pay minimal to fix the worst of the ducts etc, get rid of the cost of copper altogether.
Sure it means they are now lumped in with everyone else with broadband, but they still have the Wireless market of which they are the clear and present winner, with coverage that simply cannot be matched.
So they lose an asset that is aging and costing more and more in maintenance, maintenance that they may or may not have been performing to a correct standard, gain $11 billion for it, and with their incumbent attitude a way to play low price on a now levelled playing field.
All the while still reaping the rewards of the wireless.
Conversely, if the FTTN keeps the copper, suddenly they may be called to question regarding the state of the copper and the ducts etc, and still have to pay the maintenance on an aging product. Or worse, they hand the aging product over based on the $11 billion deal, and say here you go, you deal with it now.
Just thinking…..
I’ve just had a thought, if NBN Co are locked into a SAU, surely they wouldn’t be able to put prices up to cover Turnbull’s FttN dream?
Well it’s not so much the SAU but irrespective of ownership or the infrastructure technology it is monopoly infrastructure with access and pricing set by the ACCC.
If for example the HFC was the only infrastructure available in some areas it would be available for wholesale and sold by all ISP’s and the pricing would be set by the ACCC.
I see no reason in such a scenario why the ACCC would set HFC wholesale pricing any different than current NBN FTTH or (maybe) FTTN pricing (other than speed tier differences), no particular community should be disadvantaged because of fixed line infrastructure type.
So you’d be happy to see a FTTN NBN lose money? Surely it with the way shorter lifespan it will have the costs could easily exceed revenue. Assuming 2040 or even 2030 as a life span is just a joke. Are the prices set by the ACCC based on cost recovery? Will they just not do that for FTTN?
The ACCC determinations is based on many things including cost recovery, they have their own internal modeling for all of this.
I don’t know why you have singled out FTTN as being the more likely to ‘lose money’ over FTTH.
@alain
I don’t know why you have singled out FTTN as being the more likely to ‘lose money’ over FTTH.
Pre-existing situation- ie the NBN. FTTN COULD have provided a good cash cow (like NBNCo’s predictions for FTTH) but with FTTH ALREADY STARTED and prices WELL publicised, people simply won’t pay as much for it because it isn’t guaranteed.
FTTN would’ve been a perfectly good business case….ONLY before FTTH was started.
@seven_tech
The ROI in a mixed infrastructure scenario is a minefield, the current 7% return on the NBN FTTH is based on 70% of premises passed taking a NBN FTTH plan, if FTTN was rolled out then that changes the whole equation.
It depends on what the figure of premises passed is for FTTN, and what FTTH/FTTN ratio we end up with, either way it will impact on the Labor NBN Co corporate plan as we know it.
But then again I don’t think the Coalition would be too fussed in trying to keep the current NBN Co Corporate plan intact without change do you?
To add to what seven_tech said, another reason prices may need to rise to recover costs before it’s obsolete. FTTH has a way longer useful life. Even at 2040 fibre will still be useful and upgradable, copper will be the equivalent of dialup sometime in the 2020s.
What I am saying about lose money, is that if they keep the price at what it is for FTTH without raising it they may not recover costs.
First of all the current NBN Wholesale pricing is intended to recover costs, whether it actually does we won’t know until 2033.
A FTTN rollout is intended to be lower cost because you are utilising existing infrastructure, it depends on what creative accounting you do with the ‘cost’ of that copper component I guess.
“A FTTN rollout is intended to be lower cost because you are utilising existing infrastructure, it depends on what creative accounting you do with the ‘cost’ of that copper component I guess.”
Alain, reply to what I posted. It was about the payback period, not the price of copper.
You are still ignoring the point I am making. FTTN has a much shorter life for pay back, therefore that will need to be taken into account. Let’s get extreme with the FTTN life, let’s assume there is a four fold error in projected internet usage and some big improvements in copper technology and FTTN is still viable in 2025. That’s only a 10 year pay back period til 2025 where as the FTTH option would still be viable 20 years on.
afaict what Thodey has said is that he won’t negotiate a lower payment than the $11bn npv of the current deal. Has anyone seriously suggested a deal for FTTN would be less than that? imo the question for Turnbull is how much more will it be for FTTN?
Every time it is mentioned be says that it wouldn’t cost extra because Telstra would be happier to get the money earlier. That’s BS. They haven’t said that, and them getting the money earlier is just less money they will get from copper before the changeover. I’m putting my money on Telstra getting paid something like a monthly ULL and that way Turnbull can ignore it because he only concerntrates on CAPEX and short term CAPEX at that.
Yep, I agree with that. The point of the article, though, is that Telstra won’t renegotiate. afaict that is not true. They just won’t renegotiate a deal that is lower than $11bn npv. imo that’s what Thodey said.
I don’t think anyone has claimed the renegotiated deal for FTTN will be lower in npv terms for Telstra. Happy to be corrected.
If Turnbull wants to switch the NBNCo from FTTP to FTTN then the Telstra deal needs to be renegotiated. Telstra appears to be willing to do this. It may be over a barrel but they will renegotiate. The articles are not very good imo.
I agree with that, Telstra would obviously prefer the $11b to remain the same because that’s what the shareholders approved.
Renegotiating the content of what the new deal now contains could be accommodated, with the important proviso that the ACCC approves of any changes.
@alain
Even IF the $11 Billion stayed the same Telstra shareholders would STILL have to re-approve it if terms changed. Value is only 1 part of the equation. That means unless Turnbull gets his A into G, he’ll miss the June meeting and push it to October, like what happened with NBNCo….the “faster” bit is slipping away quickly by that stage….
The ACCC approval will add at LEAST 3 months if not 6 minimum to it.
I don’t see the ACCC approving any deal that gives Australia’s biggest by far broadband and wireless provider increased market dominance.
Even calling Optus number two is stretching the meaning of being second to new heights. :)
http://www.zdnet.com/au/turnbull-still-confident-of-telstra-nbn-deal-change-7000012120/
Strangely I seem to now be unable to comment on ZDNet
“But we can change, for example, [what] we can do. We can use their copper, we can do fibre-to-the-node rather than fibre-to-the-premise, as long as Telstra shareholders are not worse off financially, and that is very manageable.”
HMM, I wonder what he is smoking ?
Indeed.
‘We can use their copper’. Yes Malcolm, but usually thats after youve written a contract and paid for it. You keep glomming and glossing over this fact every time you say it but it doesn’t make it any less a problem for you when you get asked to actually DO something in the ministry to which you aspire.
As long as shareholders are not worse off… Who does he think he is kidding? Telstra seem to have pretty much announced they will ensure that previous deal value, 11bn, is the minimum charge – for them the only way is up. If work isn’t being duplicated with what’s in the citi estimate and that count is accurate at 16.7bn, its starting to look an awful lot like ballpark 27.7 bn, and there’s yet to be a discussion of what some hundreds of m of copper per premises is worth. Tack on the satellites … Well it may have been possible to wangle a numerically smaller cost before but stuff like this lengthens the odds to me, rather than backing it in.
Wait, so at the end of the day, if Labor lose the election, the factor that will most likely save the NBN is Telstra digging their heels in???
Mother of God…..
The thing is, Thodey has gone out of his way to play the nice guy in an attempt to mend Telstra’s relationship with the government (which had degenerated to all-out hostility thanks to Ass-Sol Trujillo). As much as I’d like to see Thodey dig his heels in and insist that the Coalition stay the course vis-a-vis FTTH, I can see him actually be willing to negotiate a deal with Turnbull for FTTN. Oh, he’ll bend Turnbull over and give him for one hell of a shafting, but Thodey will offer him a cigarette afterwards.
I’m not a financial advisor. But if the Coalition wins in September, it may well be worth buying some Telstra shares.
Given their history indicates we are probably safe till at least the 2016 election.
Unfortunately by that time the original deal will be off and we are back at the negotiation table again.
The Liberal should never have sold Telstra.
The NBN will cost $40 billion just to re-cable the wires in the house (Telstra) so how much was the house worth when the Libs sold Telstra, maybe $1 trillion.
How do we value companies?
A fire sale like how Telstra was sold or the cost if we had to rebuild all the infrastructure after a disaster.
The cost to rebuild Telstra, all the pits, ducts, towers, exchanges and cables, if everything was demolished and we had to start again may be in the figure of $1 trillion and we sold Telstra for how much?
Hi abettertax,
where are you getting these figures from? Delimiter is an evidence based site, so it is always good to be able to back up any figures with some kind of reasonable sources.
Value obviously means different things to different people. Telstra makes something like 4 billion profit per year, which would make a very poor return on a trillion dollar investment. Not to mention how much of that profit comes from the wireless which they built themselves.
I would think very shortly Kevin Rudd will be our Prime Minister again. A very smart business man, much more intelligent than Malcolm Turnbull. And as a family more richer. He will be to the equal of any Telsta bigshot. He may suggest that Telstra should be able to roll out the NBN at a lower price and give incentives.This may come in the form of setting a price for the coming up auction, I presume equivalent to 1 billion Euros. A bidding war is rediculous. The rest of the shares in the Future Fund will be for sale at $5 as from about November. (the value of shares will be that by then). The election date will be altered. Chinese interests will purchase probably all of the Future Fund shares in a deal with Mr Long Dong Sin. Rapidly Telsta will be connecting the underwater copper to fibre and merrily onto Asia. There has been a little corrosian but that can be tissied up. Then we all need to learn Mandarin.
Talking to a guy rolling out fibre. Rats eat it like it is going out of fashion. They are blowing something into the conduit to try and get rid of them.
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