Telstra takes NBN Co to court over $11bn deal

Telstra is suing NBN Co over the value of its $11.2 billion deal, saying the government has incorrectly measured the deal's start date.

Telstra is suing NBN Co over the value of its $11.2 billion deal, saying the government has incorrectly measured the deal's start date.

(Credit: NBN Co)

NBN Co and Telstra struck a deal in 2011 to allow the NBN constructor and its contractors access to Telstra's pits and ducts — the infrastructure that would make it possible for NBN Co to roll out optical fibre for the NBN and to deliver it to homes and business premises.

The deal between the two companies was signed in the middle of the year but wasn't ratified by shareholders until Telstra's annual general meeting later in 2011. Partially due to that delay, the act separating Telstra into its retail and wholesale arms, required for the deal, was not accepted by the Australian Competition and Consumer Commission until March 2012.

The issue that Telstra and NBN Co are disputing centres around the date that the deal officially came into being. NBN Co claims the deal applied from March 2012 onwards, after the ACCC's decision; however, Telstra believes its 2011 board and shareholder actions signified the start of the agreement.

The deal's start date is important because Telstra's claim means that consumer price index (CPI) adjustments would apply for the year starting 1 January 2012, as well as 2013, whereas NBN Co believes they should only apply from 1 January 2013 onwards.

A Telstra spokesperson told ZDNet that the disagreement over numbers would mean a significant amount of money but would not be relative to the scope of the deal overall: "The impact to us over the term of the agreement is significant but not material from a market perspective."

ZDNet understands that the difference between the two claims amounts to around $100 million. Telstra and NBN Co are set to renegotiate the deal in coming weeks to reflect changes in the NBN's design.

This latest stoush around the National Broadband Network comes as the government-controlled company cuts 500,000 connections from its roll-out schedule, leaving residents and businesses around the country in limbo as to whether they will be covered by high-speed fibre to the premises (FTTP) rather than the technically inferior fibre to the node (FTTN) advocated by the country's recently elected Liberal government.

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