[LINK] Way open for one-off payment to Telstra

David Boxall david.boxall at hunterlink.net.au
Mon May 10 12:00:18 AEST 2010

I guess, if it's cheaper than rebuilding the CAN from scratch ...


THE federal government may yet make a special payment to Telstra 
separate from any deal the company reaches with the national broadband 
network, the Communications Minister, Stephen Conroy, has indicated.

Telstra is in negotiations with the government's NBN Co over a sale of 
the telco giant's fixed-line infrastructure, but Senator Conroy 
yesterday revealed on ABC1's Inside Business that there were parallel 
discussions between the Telstra and the government.

While he declined to comment on the detail of those separate 
discussions, citing their commercial sensitivity, he said topics 
included legislation to pressure the telco into splitting its retail and 
wholesale arms and boosting competition in the sector, as well as a 
draft bill limiting NBN Co's ability to provide retail services.

He also indicated it was possible those negotiations could involve 
government payments to the company. Asked if all payments to Telstra 
would be from NBN Co rather than the government itself, Senator Conroy 
refused to provide an assurance, noting ''it goes to the heart of some 
of the negotiations''.

The separate discussions could point to a way through the apparent 
impasse between NBN Co and Telstra. Negotiations have been under way 
since December and, while both parties remain tight-lipped, the 
disagreement reportedly centres on differing estimates of the value of 
Telstra's network.

The additional payment could bridge the gap between the two valuations.

A payment would also have political benefits for the government. It 
would protect NBN Co's balance sheet, boosting the project's financial 
prospects and increasing the likelihood that it achieves returns of 6 to 
7 per cent identified by the implementation study released last week.

It would also help to placate angry Telstra shareholders, many of whom 
fear that the company is being dudded by the government.

The implementation study found the network could be built for less than 
$43 billion without a deal with Telstra, but that the price tag would 
come down significantly if an agreement was reached.

One industry source speculated yesterday that an additional payment 
could be made as part of an industry restructure, similar to 
compensation paid to farmers as part of water reform. The source also 
suggested that more generous payments to Telstra for fulfilling its 
universal service obligation on pay phones were possible.

The shadow treasurer, Joe Hockey, yesterday renewed the Opposition's 
attack on the broadband plan, describing it as a ''technology punt'' 
likely to produce a ''world of hurt'' and have implementation issues.

David Boxall                    |  Dogs look up to us
                                |  And cats look down on us
http://david.boxall.id.au       |  But pigs treat us as equals
                                                    --Winston Churchill

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