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Telstra hopeful on NBN deal

Telstra says reaching agreement with regulators on the telco's participation in the national broadband network before the end of the year is achievable.

Telstra could reach agreement with regulators over its participation in the National Broadband Network (NBN) before the end of the year, the telco says.

Telstra chief financial officer, John Stanhope, says discussions with the Australian Competition and Consumer Commission (ACCC) was the last step for the $11 billion transaction to be completed.

"We still believe that a final decision by the ACCC is achievable before the year end," Stanhope said during a briefing to the financial community in Sydney on Friday.

The deal with the federal government and NBN Co — the government-funded company charged with building and operating the NBN — received shareholder approval last month.

Also, Telstra has said it has received a favourable ruling from the Australian Taxation Office.

Under the deal with the federal government and NBN Co, Telstra will progressively decommission its copper-based network and allow NBN Co to access its pits, manholes and exchanges, and sell some infrastructure.

In return, Telstra will receive $11 billion from the federal government, with the financial benefits to come over a 30-year period.

The ACCC is reviewing Telstra's structural separation undertakings (SSU) and is yet to issue a ruling.

The regulator in August said it could not accept a crucial aspect of the SSU, saying the telco had no compliance plan for its commitment to structurally separate its two arms from 2018.

Stanhope said the ongoing discussions with the ACCC centred on the rules around equivalence.

"We continue to believe that none of the issues raised by the ACCC in relation to the SSU are insurmountable," Stanhope said.

At 1030 AEDT, Telstra shares were steady at $3.19.

Meanwhile, Telstra reaffirmed earnings guidance for 2011/12 for low single-digit growth in revenue and earnings before interest, tax, depreciation and amortisation (EBITDA).

It also maintained guidance for a 28 cents per share full-year dividend.

In terms of current trading, Stanhope said Telstra was on track to post "modest" revenue growth and "slight margin expansion" in the first half of 2011/12.

"The overall momentum in the business remains good," Stanhope said.

Telstra chief executive, David Thodey, said the telco had recorded strong growth in mobile customers and also added fixed broadband customers in the three months to September.

"Importantly, we are adding those new customers profitably and without sacrificing average revenues per customer," Thodey said in a statement on Friday.

However, weakness in the Sensis business, which owns the Yellow Pages, would mean a different mix to Telstra's earnings and revenue mix in the year, he said.

Sensis had experienced lower than expected take-up of digital products by small businesses, and revenues were also lower than expected because sales completions were taking longer than anticipated.

Also, the rate of decline in Yellow Pages print directories had risen significantly more than predicted.

Thodey also announced, during Friday's investor briefing, the merger of all of Telstra's media businesses into one division.

The new Telstra Digital Media division will manage the telco's media capabilities, including Sensis, BigPond, Trading Post, IPTV, Foxtel and other digital content arrangements.

Current Television New Zealand chief executive Rick Ellis is due to join Telstra in January to head the digital media division.

Thodey also said Telstra would invest $100 million over four years to upgrade its media infrastructure, improving the delivery of broadcast quality video streaming to customers connected to the internet.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

More about: ACCC, Australian Competition and Consumer Commission, Australian Taxation Office, etwork, Foxtel, Telstra, Trading Post, Yellow Pages

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