Wednesday, 30 August 2017 14:09

NBN Co rejects Telstra NBN revenue monetisation plan Featured


A Telstra plan to monetise around $5 billion in future revenue from NBN payments has been scuppered by the company running the broadband network, NBN Co.

Telstra advised the ASX on Wednesday that the NBN Co had blocked its monetisation proposal, and “technical consents from NBN Co will not be forthcoming”.

Only a week ago Telstra announced to the market its proposal to monetise some of its locked-in recurring NBN revenue — estimated at around 40% of the total revenue — but Wednesday’s announcement by NBN Co appears to have put a stop to the plan.

The Telstra share price fell by up to 8.6% after the news broke, ending the day at $3.60, the lowest level in five years.

Analysts told The Australian that share buybacks, which Telstra had intended to fund with the proceeds of the NBN fund monetisation, were now unlikely to go ahead.

In its response to Telstra today rejecting the plan, NBN Co says, “Essentially we can’t see how NBN Co's position can be protected/improved by Telstra’s securitisation plan especially given the unpredictability of our operating environment in the 2020s.”

In its statement, Telstra says the proposal was subject to agreement “and a number of steps including approvals and consents from investors, the Commonwealth Government and NBN Co”.   

“While the proposal is well progressed and supported by equity and debt investors, Telstra has been advised this morning that technical consents from NBN Co will not be forthcoming,” the telco says. 

Telstra also says the proposed transaction highlighted the “significant value in Telstra’s core underlying telecommunications infrastructure as represented by the potential nbn monetisation opportunity”.  

“The process has shown the value of these payments to Telstra shareholders.”

Telstra also confirmed that its shares trade ex-dividend today. The company had announced when releasing its annual results that it would be moving to a lower dividend payment from now on.

Telstra is expected to get about $1 billion annually from the recurring NBN Co payments, for accessing its pits and ducts, by the time migration to the broadband network is completed.

The telco is set to receive about $11 billion in compensation for the use of its copper network.

Lease payments from NBN Co extend to 2045 and Telstra has tried to draft a plan to access some of that revenue in advance and securitise about 40% of the money it gets for the access.

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Peter Dinham

Peter Dinham - retired in 2020. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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