NBN Co and Telstra reach agreement on CPI increase timing

10 Apr 2015

Australian fixed line incumbent Telstra and NBN Co, the company overseeing the National Broadband Network (NBN) project, have reportedly reached a secret deal to end a court battle related to the timing of payments for the NBN’s construction, according to the Sydney Morning Herald.

Telstra had launched legal proceedings against NBN Co in the New South Wales (NWS) Supreme Court over issues linked to when annual Consumer Price Index (CPI) increases should be applied to its AUD11 billion (USD8.47 billion) deal to rent its infrastructure for the construction of the NBN. With the telco reportedly of the belief that the increase should apply from 2012, NBN Co had argued that approval delays meant the increase should in fact not start until 2013. With the difference in opinion valued at around AUD200 million of the life of the contract signed between Telstra and NBN Co, an agreement has now been reached. A Telstra spokesperson was cited as confirming the development by saying simply: ‘The parties have reached agreement on a commercial resolution to this matter.’

As previously reported by CommsUpdate, in December 2014 Telstra and NBN Co inked revised definitive agreements which the latter claimed would ‘pave the way for all Australians to have access to fast broadband by 2020’. Under the terms of the deal, NBN Co said it would progressively take ownership of elements of Telstra’s copper and hybrid-fibre coaxial (HFC) networks at ‘no overall additional cost to the taxpayer’. As per the original definitive agreements between NBN Co and Telstra, which were signed back in June 2011, the former gave the latter access to certain assets such as ducts, pits and exchanges to use in the NBN rollout, though notably it did not agree to provide access to its copper or HFC assets. With Telstra having previously been required to progressively disconnect premises connected to its copper and HFC broadband networks as the NBN was rolled out, the updated deal will see it continue to disconnect premises, though in those areas where NBN Co uses the incumbent’s infrastructure to deliver an NBN service the operator will transfer ownership, and the operational and maintenance responsibilities for the relevant copper and HFC assets, to NBN Co.

Australia, NBN Co, Telstra (incl. Belong)