Telstra best placed to exploit NBN fire sale

By Ry Crozier on Mar 31, 2011 2:34 PM
Filed under Telco/ISP

Propped up by $9b NBN Co injection.

Telstra would be best placed to buy the assets of a failed NBN at a fire-sale price as little as 20 cents in the dollar, according to NextDC founder Bevan Slattery.

Speaking at the CommsDay Summit closing keynote, Slattery outlined a litany of reversals, delays and broken promises on the NBN project.

He said that while he was not "digging at NBN Co – those people are there to execute a strategy from Government" – he believed the NBN would ultimately fail because it was "turning toxic".

And he believed only one telco to have the budget and assets to make use of what was left of the NBN if the "toxic" project was to fail as he predicted.

It was the same telco in negotiations for a $9 billion payment from NBN Co for passive infrastructure leases and customers.

"The sad part is Telstra is the only buyer if [the NBN] fails," Slattery said.

"No private equity firm could come in here and say we'll buy the NBN because [the NBN] doesn't work unless you've got the customers, [and] Telstra owns the majority of customers.

"So if the NBN fails - and I think ultimately it will, that's not me being an anti-NBN blah blah blah - as a pure businessman I look at this and think this is a bad investment and this will fail. If that's the case, Telstra is in my opinion the only possible buyer.

"They've got their [4G] spectrum, they've got their money, they get to buy [a fixed network] back for 20c in the dollar," Slattery said, to nervous laughter.

Slattery said it was in Telstra's interests to ensure the NBN got at least four years down the build path.

"If [NBN] fails early the copper stays in place, the copper monopoly goes for another five years," he said.

"If it happens later [Telstra] get more network-funded by the taxpayer at 20 cents in the dollar. So it is in Telstra's interests to make sure [NBN Co] gets four years into this thing [or] as far as they can."

Slattery said Telstra had "the best negotiator onside, and that's time."

"They sit there and wait, and wait, and wait," he said.

"Being a person who's negotiated FAAs [facilities access agreements] with them and a whole bunch of things, time is always on their side."

Slattery also said the industry was "starting to turn against NBN Co."

"Optus and a whole bunch of other guys who were very supportive of this process are all kind of going ewww, we have some reservations now," he said.

"For those guys to come this far forward and actually state they have some concerns and reservations is very important."

Telstra best placed to exploit NBN fire sale

8 comments in this discussion

"Slattery says "as a pure businessman I look at this and think this is a bad investment", but also says outlines 'a litany of reversals, delays and broken promises on the NBN project'. Now, does Mr ..."

By Ace

Tags

telstra, placed, exploit, nbn, fire, sale, fail, bevan, slattery, nextdc, toxic

Coalition takes NBN back to the drawing board

Feds urged to retain Telstra copper in NBN world

iiNet, Optus reject Telstra's revised NBN infosec plan

Qld Govt widens asbestos scandal

Breaking Stories

Telstra opposes 700 MHz for emergency 4G network

AusPost, NAB combine on Agile project

Aussie IT workers threatened by skilled migrants: survey

Transfield wins new NBN contracts

G8 countries sign up to Open Data Charter

Readers of this article also read...

Comments: 8

Rossko Mar 31, 2011 5:04 PM	Bevan Slattery says that 'the NBN would ultimately fail'. How can this be? NBN Co is a government-funded venture - hence it can't 'fail' as such, it merely draws more and more on the public purse, one way or another.
cootified Mar 31, 2011 5:21 PM	In reply to Rossko I guess its the case of "fail to plan, plan to fail"... The NBN never had sound business plan to begin with. It was an idea. Statistically, that's how business fail and that's how NextDC got their data. :-)
Rossyduck Mar 31, 2011 5:37 PM	Why would you expect it not to be toxic ? The people at the top have no FttH expertise, and do not know what they need ito of expertise. To them, Ftth fibre is/was the same as a exchange trunk and they have surrounded themselves with similarly minded people. Every document they issues, every communication with them leaves me dumbfounded as to how clueless they are. And these are the people Government tells us we now need to listen to and build our networks, let alone being let loose with our tax $$. I am sure after the first few years they will all be experts at our expense but in the interim ...
HubertCumberdale Mar 31, 2011 5:59 PM	I always love these early April fools articles.
adavion Mar 31, 2011 7:03 PM	Step one would be to send NBN Co's fat 100Mbps CVC pipes on a detox diet until capacity can be purchased in 50kps increments.
MerariSchroeder Apr 1, 2011 9:24 AM	You seriously have to ask yourselves, why wasn't Telstra given a share of NBNCo? Isn't that what Conroy said would happen? I imagine the negotiations went a little something like this: [Conroy] Hi Telstra, I just tried passing legislation that will force you to negotiate - if you don't you won't get wireless spectrum. [Telstra] Please hold... [Conroy] Please, oh, please, let us access your trenches, and in return I'll give you a slice of NBNCo pie! [Telstra] I would rather cash - I don't like the risks. [Conroy] Ok and we'll also give you wholesale volume discounts so you can re-establish the monopoly I pretended to remove. [Telstra] Sweet, we'll buy you out when you go bust [Conroy] Thanks. [Telstra] Nice talking to you. [Conroy] You too, Rudd\Gillard\Australia will love this!
anonymous Apr 1, 2011 1:48 PM	Not QUITE right, Merari. All the Telstra responses would more likely be along some familiar lines: (Telstra) Your call is important to us and has been placed in a queue; placed in a queue; placed in a queue; etc @Hubert, as usual you are showing both industry knowledge and common sense. What a pity there aren't more like that. . .
Ace Apr 1, 2011 11:05 PM	Slattery says "as a pure businessman I look at this and think this is a bad investment", but also says outlines 'a litany of reversals, delays and broken promises on the NBN project'. Now, does Mr Slattery think NBN Co is a government agency, or a commercial company? He seems a little confused.