Telstra Signs New $11 Billion Agreement With NBN Co

Here's a nice little early-Christmas present for Telstra: the telco has just signed a brand new agreement with the National Broadband Network Company worth $11 billion.

Image: Getty

The deal formalises the Government's new multi-technology mix approach to building the NBN, and allows them to build fibre-to-the-node connections using Telstra's copper network.

Rather than pay Telstra $11 billion to decommission the copper network under the previous Labor government's plan, the new Coalition Government will pay the telco the same amount with slightly different terms.

The new arrangement still sees Telstra disconnect premises as the NBN is connected there, except for when the service uses either Telstra's existing copper or hybrid-fibre coaxial (HFC) networks. In that case, Telstra will transfer ownership of the connectivity assets (that is: the fibre/copper and the ongoing maintenance and operation of said assets) to NBN Co.

Telstra has negotiated the deal so that it will still deliver Foxtel over the HFC networks after it's transferred to NBN Co for uninterrupted service for customers.

Under the new agreement, Telstra still isn't getting $11 billion in a lump sum: the payment schedule is still tied to the roll-out of the NBN.

As a result of the new deal, Telstra CEO David Thodey said that the company and its shareholders have been "kept whole" based on the value of the transaction resembling what it signed back in 2011.

NBN Co CEO Bill Morrow said at the same press conference this afternoon that the new agreement will allow the company to "shave years off the NBN rollout schedule."

"In the last six years, we have connected 300,000 users. In the next six years, we want to scale up to 8 million users," Morrow said, praising the new agreement as it no longer required Aussie families to "have their gardens...and driveways" dug up.

Under the old fibre-to-the-home plan, the NBN Co would dig up streets to lay fibre to every home. The new agreement formalises the fibre-to-the-node plan, which allows for existing copper to cover the last mile between street-based fibre nodes and the homes themselves.

The deal is still subject to regulatory approval from the ACCC.

Optus has also struck a deal with NBN Co for use of its hybrid-fibre coaxial network today. The agreement means that Optus will gradually transfer ownership of its HFC assets to the NBN Co, but it will retain ownership of the fibre used to connect mobile base stations as well as its aerial fibre.

Optus will supply HFC to its customers until they're migrated.

Shadow Communications Minister, Jason Clare MP, has said in a press release that Tony Abbott's Christmas present to Australians this year is "an old, out of date copper network".

"Merry Christmas Australia...Today Tony Abbott has bought back the copper network that John Howard sold last century. To keep it working he is going to have to spend billions of dollars over the next decade - and all Australia will get from it is a second-rate NBN," he added.