Telstra banks on NBN deal to aid declining wholesale revenue

Telstra banks on NBN deal to aid declining wholesale revenue

The telco said settling its $11 billion deal with NBN Co will ease regulatory unrest which was to blame for wholesale revenue decline.

Telco giant, Telstra (ASX:TLS) has revealed its wholesale revenue has taken a plunge but it hopes finalising its National Broadband Network (NBN) deal with NBN Co will help soften the blow.

During its Annual General Meeting (AGM), Telstra CEO, David Thodey, discussed the current condition of the telco. He pointed out while Telstra’s supply of wholesale services has remained steady, revenue dropped 20 per cent.

Thodey blamed this on the reduction in wholesale prices by the Australian Competition and Consumer Commission (ACCC).

“We have seen acceleration in this decline in wholesale revenues over the last 18 months. Telstra wholesale customers have accelerated the shift of their product mix to significantly lower cost-regulated wholesale services (called ULL and LSS),” he said. “These regulatory changes make it difficult to forecast the future of revenues of this business.”

Rounding up its $11 billion non-binding agreement with NBN Co would provide the business with greater regulatory certainty, according to Thodey.

In June, Telstra agreed to the non-binding agreement to decommission its copper network and move its consumer customers to the NBN. The deal is subject to shareholder approval.

“NBN negotiations remain critically important,” Thodey said. “We are keen to see the negotiations move forward as quickly as possible with the Government and NBN. We are very clear on what is required to conclude these negotiations so that we can bring this proposal back to you [the shareholders] for a decision.”

Telstra’s wholesale broadband business has been at the centre of numerous complaints from its resellers due to accusations of unfair pricing that favours the telco’s vertically integrated retail arm, BigPond.

Internode, iiNet and iPrimus have been the most vocal about the issue. In July, Internode urged the ACCC to ‘lay down the law’ to Telstra over what it alleges is anti-competitive behaviour breaching the Trade Practices Act. iiNet followed suit.

In the same month, the ACCC won a case in the Federal Court against Telstra for denying competitors access to the infrastructure and the telco was fined $18.55 million.

The consumer watchdog also released an open letter flagging tighter regulation on Telstra’s ADSL wholesale prices.

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Tags NBNTelstranbn cofinancial resultstelstra wholesaleTelstra AGM 2010


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