Telstra Joins The NBN For $11 Billion

First the government announced the NBN. Then they threatened to lay the smackdown on Telstra if they didn't play ball. Well, it looks like they've won, yesterday announcing that they have struck a deal with the Big T to buy access to Telstra's existing broadband infrastructure, while moving Telstra customers from the old copper network to the new NBN.

The agreement - which still needs to be signed of by Telstra shareholders - essentially saves time and money in rolling out the NBN, as the Government won't have to rebuild the basic broadband infrastructure that Telstra already has.

Telstra will then lose its position as a broadband wholesaler, meaning it won't be able to set pricing for other ISPs to use their infrastructure, which should lead to lower broadband pricing across the board. Which is kind of exactly what the Government threatened to do when they told Telstra they'd introduce legislation to see them structurally separate. The telco will also transition its customers to the new fibre network and then shut down their copper and cable networks.

So far, it all sounds pretty damn good if you're a customer or Stephen Conroy. But what about Telstra?

Well, the Big T gets a $9 billion payout for access to their current infrastructure. That's a fair chunk of cash for something Telstra already owns. They'll also get $2 billion to cover the cost of setting up a new company to make sure there aren't any hiccups along the way, and that everyone can still call emergency numbers during the transition from copper to fibre. Plus $100 million to retrain and redeploy staff.

They've also received written confirmation from the PM that should the deal go through, they'll be able to bid on LTE wireless spectrum. And that's the big win for Telstra - they'll be able to take some of that $9 billion, and invest it in improving their already fantastic NextG wireless network to LTE.

So what next? Well, there are a few conditions that need to be met and the proposal still needs the approval of Telstra's shareholders. Telstra reckons that'll happen in the first half of 2011. So in other words, despite the fact the NBN should roll out a bit faster now, it's still a few years away before it will actually be available to everyone.

[Telstra]

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