Telstra ready to talk on broadband

Rose Major

Signs abound that Australian telco Telstra may be taking a more conciliatory line with the government, following the announcement that the national broadband network (NBN) will be built as a public-private partnership.

The Australian federal government last week announced it would set up a new venture to build the new national broadband network which will eventually deliver speeds of 100 Mbps to 90% of the population. The build will cost up to A$43 billion, with the government putting up 51% of the funds for a majority stake.

Telstra again wants a slice of the broadband action, after effectively ruling itself out of the bidding process for the original tender. Now that has been scrapped, the telco seems more willing to co-operate with the government’s plans.

First, Telstra has set up a joint board/management committee that will conduct negotiations with the government over any role for Telstra in the new build. That will provide “continuity”, with chief executive Sol Trujillo giving up his post on June 30.

Second, the telco is also reported to be considering selling some assets to the government to use as part of the new network – a similar move to that also reportedly being considered by its rival, Optus.

Telstra has already started upgrading its HFC cable network to speeds of up to 100Mbps, originally to rival the new network but now maybe to aid in its completion. The government would require, however, that any parts of the network already built, be brought under the ownership of the new company and not be controlled by an outside party.

Ratings service Standard & Poor's yesterday downgraded Telstra's outlook from stable to negative, reflecting what it said were "significant uncertainties regarding Telstra's longer-term position in the provision of local fixed-line telecommunications infrastructure in Australia, and also the future structure and composition of Telstra."

It is important now for Telstra that the company is seen as part of the broadband solution in order to retain value for shareholders. That will require a shift in the company's corporate attitude, from digging in its heels against the government, to working with authorities to create certainties.