UPDATED: NBN Co and Telstra avoid court over CPI dispute

$200 million dispute over CPI adjustments

NBN Co and Telstra were this morning due to appear before the NSW Court of Appeal but are instead engaging in out of court negotiations over a dispute worth up to $200 million.

The dispute between the two parties relates to the $11 billion agreement governing the migration of Telstra's customers onto the National Broadband Network and NBN Co's access to Telstra infrastructure for the rollout of the NBN.

The dispute relates to when consumer price index (CPI) adjustments apply to the agreement between the two companies and is estimated to be worth up to $200 million over 30 years.

The agreement between Telstra and NBN Co allowed for CPI increases from the first of January every year after the agreement commenced.

The original agreement was signed in June 2011. Telstra previously argued in court that CPI increases should take effect from 1 January 2012. NBN Co argued that the agreements were only finalised in March 2012, and CPI adjustments should begin from 1 January 2013.

An NBN Co spokesperson this morning said that the hearing would go ahead despite the two companies in December revising the original agreement, taking into account the shift from an all-fibre network to a 'multi-technology mix'.

However a Telstra spokesperson later confirmed that the two parties had instead engaged in a round of out-of-court negotiations over the issue.

"The parties are negotiating to finalise an acceptable commercial resolution in relation to the historical contractual interpretation of the original Definitive Agreements," the spokesperson said.

NBN Co revealed in August it would appeal the original Supreme Court ruling that favoured Telstra.

Hearings were scheduled for today and tomorrow. The Supreme Court no longer lists the matter for consideration tomorrow.

Updated at 5.30pm to reflect that the scheduled court hearing did not go ahead.

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