Telco/ISP

Conroy inadvertently leaks Telstra's network value

"A classic horse and carriage (or FB Holden), in good condition, might well retail for something close to a new Mercedes S Class. Although I guess antique value is unlikely to apply to a telecommun..."

By RDEFCON1

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By Ben Grubb

Oct 27, 2009 2:37 PM

Tables confidential details of core network.

Communications Minister Stephen Conroy has admitted he inadvertently tabled part of a confidential report that revealed the competition watchdog's valuation of Telstra's core network.

"The ACCC document containing commercially sensitive information was tabled by mistake and the Government regrets the error," the Communications Minister's spokesman told iTnews today.

"The value of network assets is a subject of talks with Telstra and we have already indicated that we will not be discussing or giving a running commentary on those discussions".

The Australian Competition and Consumer Commission (ACCC) report revealed it valued Telstra's core network assets at anywhere between $7.9 and $17.6 billion when depreciation of the assets was factored in.

Valuations using a Telstra model put the cost of building the network from scratch at $33.03 billion - or $27 billion if "less ducts and pipes are used on an optimal network than on the current network".

iTnews obtained part of the report which purportedly showed the ACCC's valuation of the Telstra assets. Below is an image representation of how those assets were displayed in the report.

Telecommunications analyst Paul Budde said the telco industry already had some idea of what the figures were.

"We knew on the upper end it was something like $17 billion and on the lower end is was something like $7 billion," Budde claimed.

"You can make whatever calculation you make of the copper network ... but the future is fibre and we're going to move to fibre and the costs of fibre are many times lower from an infrastructure point of view and maintenance point of view than copper".

Budde labelled the release of the data as "embarrassing" and "stupid".

"It's embarrassing that the Government didn't look after the information properly which they should have done," he said.

"It's stupid, just stupid. It should not have happened."

Opposition Communications Minister Nick Minchin slammed Senator Conroy claiming the valuation data jeopardised negotiations.

"This is just the latest episode in a two year long saga of incompetence from this Minister," Minchin said.

"This information goes to the heart of confidential negotiations and Senator Conroy has released terms of those negotiations in the public arena further jeopardising this entire process".

The report was tabled after Minchin successfully blocked any further NBN bills from being debated until the NBN expert panel report and accompanying ACCC report were released.

A further 16 pages were released from the 893-page NBN expert panel report, whilst a "secret letter" remained to be tabled.

Comments: 7

Thoughts on this article? Add a comment below.

Sams Oct 27, 2009 3:17 PM	Conroy to Rudd (Maxwell Smart accent): "Are you getting one of those headaches again, Chief?
RDEFCON1 Oct 27, 2009 3:50 PM	"Inadvertently". Synonyms: heedlessly, negligently, rashly, recklessly. At least Labour is consistent.
DJ Oct 27, 2009 7:14 PM	Well, it's not really a devastating mistake to release the value of Telstra's network. After all, it is at least part owned by the taxpayer, so surely we have the right to know a ball-park figure. Geeeez, Telstra is certainly under massive pressure now, and perhaps this was brought on by the years of inflexibility and lack of maintenance on the copper network which we all now can see is dying a slow, miserable death. Quick, someone connect me to ADSL2.... oh, sorry you are on a "RIM device" and therefore can only attain 3.6MBps for the 20MBps you are paying to Telstra. How about 3G? Well, it kind of delivers fast, latency based, internet when the weather suits and the base station is working properly and the area is not congested with other 3G users and the router doesn't fall over and any other condition which allows 3G not to work properly. Bring on fibre baby, bring it on. Dave.
wjc Oct 27, 2009 11:08 PM	Australia's "Pair Gain" disaster is now staring us in the face ... and what we suspected is now in the open! That one line says it all! Potentially a gross CURRENT value of $4 billion in utterly obsolete "pair gain" systems that deny Australians of any reasonable attempts at having any form of broadband access. Look at the CURRENT vs HISTORIC figures for pair gain systems for a simple statement of this really bad legacy BUT - what does it mean for costing that core promise of 90% coverage for fibre-to-the-premises...and remember that may also include replacing those dreadful RIM/MUX units?
maui1964 Oct 28, 2009 10:35 AM	Valuing an aging CU network at $33 billion is like valuing your Grandparents FB Holden at market rates for a brand new SS-V. And valuing the same networks replacement value at $33 billion is equally wooly-headed reasoning, as the upgrade will be Fibre, not CU. Apples and Oranges. The CU network only has its intrinsic value while there is no competing next generation network to challenge it. Let Telstra keep their CU network at whatever value they want to pin on it, while the fibre network rolls out around it : once the fibre network is commissioned, lets see what value the copper network has. I have the feeling it will be much like Radiator Springs in the childrens movie Cars : a little backwater bypassed by a new 4 lane interstate.
Digger11 Oct 28, 2009 11:52 AM	I humbly disagree, Valuing an aging CU network at $33m is like valuing a Horse and Carriage at market rates for a brand new S Class Mercedes.
RDEFCON1 Oct 28, 2009 3:36 PM	A classic horse and carriage (or FB Holden), in good condition, might well retail for something close to a new Mercedes S Class. Although I guess antique value is unlikely to apply to a telecommunications network! ;) Seriously, though - the value of the network should be based on it's potential revenue generation (and yes, maui1964, it will still generate substantial revenues even in competition with a Fibre build - not everyone needs or wants a premium fibre network), less it's operational costs, over a decent timframe (say 10+ years). Anywhere in the $15-$40bn range doesn't surprise me at all.