TELSTRA will hand over millions of customers to the federal government's new national broadband network and close its ageing copper and cable networks in an $11 billion deal that will fundamentally reshape the communications industry.
Telstra chief executive David Thodey signed a heads of agreement with the government yesterday that spells generational change for the company, as it will abandon its traditional core business of fixed-line communications networks. The deal is a breakthrough for the government's plans to build a $43 billion, superfast broadband network, as the deal will allow the new services to be rolled out faster and more cheaply while delivering up to 10 million customers to the new government-owned business.
Announcing the agreement, Prime Minister Kevin Rudd said it would make Telstra a participant in the rollout of the national broadband network - one of Labor's main election promises - and the new network's largest customer.
The agreement, which comes after a year of negotiations, would provide ''cheaper, better broadband services to Australian families and to Australian small businesses right across the nation''.
''After 20 years it also achieves fundamental structural reform in the telecommunications sector by separating out wholesalers from retailers and therefore represents a major reform to the nation,'' Mr Rudd said. Minister for Communications Stephen Conroy said the deal would go down as ''the moment the Australian government and the industry joined together to revolutionise the telecommunications sector in this country''.
Telstra chairman Catherine Livingstone said the proposed transaction would deliver payments and financial savings to the telco over coming years with a ''net present value'' of $11 billion after tax.
Ms Livingstone emphasised that the heads of agreement needed to be followed by finalisation of detailed binding agreements, which, in turn, would need shareholder approval before they could be implemented.
But she said the agreement was encouraging after a year of complex negotiations with the government and NBNCo, the government-owned company building the national broadband network.
''The heads of agreement is consistent with the government's high-speed broadband vision and desired industry structure,'' Ms Livingstone said.
''This agreement reflects a commitment by all parties to reaching a mutually beneficial outcome for Telstra investors, customers, employees and the industry.''
The agreement comes as the government has been struggling in the polls and is in dispute with the mining industry over its plans for a new resource rents tax.
Under the deal, NBNCo will pay Telstra to use its ducts, pits, conduits and space in its exchanges for its ''fibre to the premises'' broadband network.
Senator Conroy said this would reduce the cost of building the new network and ensure more of the network was underground.
Telstra will transfer customers from its copper and hybrid fibre coaxial cable networks to the new network in return for further payments from NBNCo.
Telstra will then decommission its copper and cable networks, getting out of the business of wholesale networks to concentrate on providing retail services and mobile and wireless services.
Senator Conroy said this would achieve ''structural separation'' by splitting up Telstra's long domination of the wholesale and retail aspects of the communications sector.
Telstra's competitors argue that the telco uses its dominance in the wholesale side of the business to favour its retail operations and hinder competition.
The Competitive Carriers Coalition said the outcome was a win for consumers, but urged the Senate to pass the legislation to lock in the deal.
''All the evidence from everywhere in the world suggests that consumers will benefit from structural separation,'' said coalition chief executive David Forman.
Email a friend