Government and Telstra trade fresh blows over NBNco

Government and Telstra trade fresh blows over NBNco

Telstra warns shareholders Government legislation could "destroy shareholder value"

The Government has traded fresh blows with Telstra over its attempt to structurally separate the telco using legislation.

In a letter to shareholders, Telstra said it supported the Government’s NBN as well as ongoing negotiation.

“However, these commercial discussions cannot be divorced from the current legislative risks your company faces,” the letter said. “We have always said this legislation is likely to destroy shareholder value and makes an agreement with NBNco and the Government harder to achieve.

On February 24, the Government also released draft legislation that would govern how NBNco is operated and regulated. Although this is only draft legislation, it raises for the first time the prospect of NBNco becoming a Government-funded retailer, not just a wholesale network provider, the letter said.

“If enacted, we would need to factor this into the financial consideration required to achieve an agreement that is in the company’s and your best interests,” the letter said.

In a press conference to launch the first trial NBN sites on mainland Australia, Communications Minister, Senator Stephen Conroy, fought back by insisting NBNco legislation was still in draft mode and rejecting the notion he was responsible for any drop in share value.

“That might be true if the share price hadn’t fallen below $3 before I issued the legislation,” he said. “I’m not sure if they thought shareholders had forward knowledge, but I don’t think they did.”

A draft piece of legislation was released for industry comment last week.

“We’ll see what the comments are, address them and make a final decision,” he said.

On the issue of negotiations with Telstra, Conroy was positive and insisted neither group was playing games or using delay tactics.

“We continue to be engaged in positive and constructive dialog. We said we weren’t going to comment on ongoing individual daily negotiations and we’re not going to start today,” Conroy said. “These negotiations are complex and there’s never more than two or three days without some sort of ongoing dialog towards trying to solve some outstanding issues.”

The Minister was more open on the issue of the Coalition, accusing them of delaying the Telstra bill over politics.

“We’ve got a whole range of Senate debates over existing bills and we’re making no progress because the Liberals, Greens and everyone else are hijacking the Senate,” he said. “If you look at the bills that have passed in the last six months, there’s almost none.”

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Tags TelstraSenator Stephen ConroyNational Broadband Network (NBN)NBNcoCommunications Minister

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