Telstra Finalizes $11 Billion National Broadband Network (NBN) Agreements

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Telstra finalizes Definitive Agreements with NBN Co and the Commonwealth for Telstra’s participation in the NBN rollout.

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Today we have concluded almost three years of intense and complex negotiations, with multiple parties, and we are very pleased we have delivered this positive outcome for our customers, employees and shareholders.

Telstra today is pleased to announce it has finalized its Definitive Agreements with NBN Co and the Commonwealth for Telstra’s participation in the roll out of the National Broadband Network.

CEO David Thodey said the agreements and associated Government policy commitments were expected to provide Telstra approximately $11 billion in post-tax net present value1 over the long term life of the agreements.

“As was detailed in the Explanatory Memorandum, compared with other realistically available options this outcome should deliver a better overall financial outcome, a more stable regulatory environment and greater strategic flexibility, enabling Telstra to maintain a strong focus on our key areas of growth,” Mr Thodey said.

“The agreements are expected to also contribute to free cashflow generated in the medium term, provide us with greater financial flexibility and a stronger balance sheet and help to offset the decline in free cashflow expected as customers migrate onto the NBN.”

Telstra noted the Commonwealth’s $190 million post-tax NPV commitment to Telstra under the Information Campaign and Migration Deed – one of the Definitive Agreements. A cash payment2 is expected this year and will be amortized over three years as Other Income as costs are accrued. This payment is outside Telstra’s guidance for fiscal year 2012.

Mr Thodey confirmed that with the finalization of the Definitive Agreements, Telstra’s Structural Separation Undertaking (SSU), recently accepted by the Australian Competition and Consumer Commission (ACCC), had also come into force.

“The Minister has made decisions that enable Telstra to retain ownership of our HFC network and our share in FOXTEL™, which along with ACCC approval of the final Migration Plan, were pre-conditions to the SSU coming into force.

“Today we have concluded almost three years of intense and complex negotiations, with multiple parties, and we are very pleased we have delivered this positive outcome for our customers, employees and shareholders."

“With improving customer service and a very strong overall value proposition we are well placed to retain and win customers as the industry transitions to the NBN.”

The National Broadband Network (NBN) is one of the Australian government's biggest ever infrastructure projects. It’s designed to ensure all Australians can choose high speed internet, no matter where they live.

1. Discounted to June 2010 and subject to a range of dependencies and assumptions.
2. Approximately $300 million in nominal terms.

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