The NBN is now an acquisition

The NBN is now an acquisition

By Alan Kohler

The existing agreements consist of a subscriber agreement that delivers cash to Telstra over 10 years for an approximate NPV of $4bn, an infrastructure services agreement that delivers payments over 30 years for an approximate NPV of $5bn, another billion in NPV for the universal services and housing estates, and another $1bn NPV for “other government commitments over 10 years”.

The negotiations between the government and Telstra about the national broadband network have become, in effect, a wrangle over the price for the re-nationalisation of Telstra’s core assets. Oh, the irony.

Critically, the new NBN also means the government will buy Telstra’s hybrid fibre-coaxial cable network (the one that delivers Foxtel Pay TV as well as cable internet) and probably the one owned by Optus, that Telstra so devastatingly overbuilt in the early 1990s.

That’s because NBN Co has engaged Telstra to build a pilot fibre to the node network in parts of regional NSW and Queensland, covering more than 200,000 homes for $150 million.

The Coalition remains committed to a national FTTN broadband network, which will involve progressively buying the copper network and upgrading it by installing neighbourhood nodes that bring fibre closer to the homes (but not all the way).

But also in the mix is the extent to which Telstra will be involved in building the NBN, now that it has been engaged to build a big pilot FTTN network in NSW and Queensland.

Assuming that works, Telstra is the obvious partner for NBN Co to use to help build the full national FTTN broadband network.

That’s the net present value of the set of agreements between Telstra and the NBN and the government that were announced on June 23, 2011, following two years of negotiations.

Read more here: Business Spectator


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