Telstra-NBN Co deal faces 1 July shareholder approval

Extraordinary general meeting scheduled to finalise $11 billion deal

Telstra chief executive, David Thodey, and chief financial officer, John Stanhope.

Telstra chief executive, David Thodey, and chief financial officer, John Stanhope.

Telstra shareholders will vote on the $11 billion financial heads of agreement with National Broadband Network wholesaler NBN Co by 1 July this year, the telco has revealed.

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As part of its half-yearly financial results, Telstra announced key commercial terms had been decided with NBN Co, months after initially envisaged and following numerous delays in negotiations.

The telco still expects to follow through on a timeline it announced at its annual general meeting last year, but negotiations have continued over what has been described as an extremely complex set of issues.

According to Telstra's chief financial officer, John Stanhope, stability around copper pricing has been a main point of contention in negotiations around the contract, a matter that is largely the purview of the Australian Competition and Consumer Commission (ACCC), with which the telco continues negotiating.

"The parties are working to complete the associated operational details and ensure all contingencies are addressed as part of the documentation process, which is expected to be completed in the near future," the company stated.

Telstra chief executive, David Thodey, added that the company was working to ensure the deal was finalised quickly.

"[1 July] is a very ambitious target however we thought it was important to put it out there," he said. "While some of those [factors] are out of our control, we're going to do everything we can."

The deal remains subject to approval by the ACCC, the completion of voluntary structural separation and passing of several pieces of legislation retaining to the NBN and Telstra in Australian Parliament.

Shareholders will be given the chance to vote on the deal at an extroardinary general meeting schedule for 1 July. The deal will also be subject to independent expert analysis, the company stated.

"Finalisation of the agreements and the target date of the EGM will continue to be subject to prior regulatory approval, price stability, confirmation of tax arrangements, and appropriate legislation setting out regulation and ownership rules for NBN Co and reform of the Universal Service Obligation," Telstra said.

The heads of agreement, first announced in June last year, will deliver $11 billion in financial incentives to Telstra, with NBN Co providing $9 billion for the use of ducts, fibre and other Telstra infrastructure. The Australian Government will provide an additional $2 billion relieving the telco of its universal service obligations.

"We are making good progress," Thodey said at an analyst briefing for the financial results. "We're working toward the finalisation of these negotiations."

He said that shareholders will be provided more information prior to the meeting, once details are confirmed within coming months. However, Thodey denied Telstra would provide shareholders with alternative options on the proposal - such as that offered by the Liberal party in opposition to the NBN.

"What we will take to shareholders is what we have certainty about," he said, pointing that the coalition's proposal wasn't certain. "We are taking to shareholders what we know and that's all I can deal on."

Stanhope, confirmed the telco was working on a retail product set under the NBN.

The telco is expected to reveal more about the deal in analyst and media briefings held in conjunction with the financial briefings.

More to come.

Follow James Hutchinson on Twitter: @j_hutch

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