Telstra concerned about NBN legislation
Telstra Corporation Limited (TLS) said, in an update on National Broadband Network (“NBN”) and Government Legislation to shareholders, that there are several complex issues about which it awaits clarification from the Government and NBN Co. The nation’s largest telco said such commercial discussions couldn’t be divorced from the current legislative risks the company faces.
Telstra brought two matters to shareholders attention in the open letter.
The first was that the Federal Government’s proposed regulatory reform package for the telecommunications industry looks likely to be debated in the Senate in the second or third week of March, while the second was that last week, the Federal Government released the NBN Co Exposure Draft Legislation that could significantly alter NBN Co’s ‘wholesale-only’ business model.
The company said its position on this Bill has not changed.
“While we support the Government’s National Broadband Network vision and sensible reforms for our industry, we have always said this legislation is likely to destroy shareholder value and makes an agreement with NBN Co and the Government harder to achieve,” Telstra said.
The company said denying it access to spectrum would harm not only shareholders, but also consumers, particularly those in rural and regional Australia.
Telstra also said the powers the legislation gives the ACCC and the Minister send a negative signal to investors in the industry and the country, while functional separation could cost Telstra $1 billion and take five years to implement, damaging customer service and providing no real benefits to consumers.
In relation to the draft legislation that would govern how NBN Co is operated and regulated, the company said it raised for the first time the prospect of NBN Co becoming a Government-funded retailer, not just a wholesale network provider.
“Such an outcome would run counter to the core purpose of the NBN and the Government’s primary policy objective of restructuring the industry to have separate providers for retail and wholesale fixed network services,” Telstra said.
“We are very concerned about this potential change in the Government’s position. If enacted, we would need to factor this into the financial consideration required to achieve an agreement that is in the company’s and your best interests.”
At the close of trade Monday, Telstra shares were trading at $2.94.
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