egolinews.com

Telstra Corporation Limited (TLS) signed a non-binding Financial Heads of Agreement with NBN Co yesterday to participate in the rollout of the National Broadband Network (“NBN”). The telecommunications giant said the transaction, if completed, would deliver it a post-tax net present value of about $11 billion.

Telstra the estimated post-tax net present value includes payment for the decommissioning of Telstra’s copper network and cable broadband service, use of Telstra’s infrastructure, and the value to Telstra of avoiding costs, including certain Universal Service Obligation costs.

The company said the transaction would see it progressively migrate its voice and broadband traffic from its copper and cable networks to NBN Co’s network, while it would also continue to use its cable network to meet its pay TV contract with FOXTEL.

Chairman, Catherine Livingstone, said the agreement is consistent with the Government’s high-speed broadband vision and desired industry structure.

“This agreement reflects a commitment by all parties to reaching a mutually beneficial outcome for Telstra investors, customers, employees and the industry,” Ms Livingstone said.

CEO, David Thodey, noted that a significant amount of work must still be done on a number of complex issues, including migration processes, taxation, the future of legacy regulations applying to Telstra and the consequences of any major changes to the NBN rollout schedule.

The company said it has received written confirmation from the Prime Minister that Telstra would be able to bid for Long Term Evolution wireless spectrum should the transaction be completed and that sufficient regulatory certainty would be provided on a range of matters for NBN Co and Telstra to enable the transaction to proceed.

“In addition to requiring shareholder approval, the Heads of Agreement has a range of conditions, including the passage of necessary enabling legislation and ACCC approval,” Telstra said.

“Accordingly, there can be no guarantee at this time that the transaction will progress to completion.”

The company said should definitive agreements be finalised, it expects them to be put to shareholders in the first half of calendar 2011.

At the close of trade Friday, Telstra shares were trading at $3.23.

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