Coalition vows to scrap $11bn NBN Co-Telstra deal

The Federal Opposition will scrap the $11 billion agreement between NBN Co and Telstra should it come to power at the next election, despite widespread industry support for the deal.

NBN Co and Telstra signed a financial heads of agreement yesterday that will provide NBN Co with access to Telstra's passive infrastructure (pits, ducts and backhaul fibre) and eliminate the incumbent as a fixed-line wholesale competitor.

But the deal remains subject to regulatory and shareholder approval, with Telstra chief David Thodey warning that a "very significant amount of work must still be done on many complex issues."

Opposition Communications Minister Tony Smith seized on the comment as he lambasted the Government over the agreement.

"It is clear that if any agreement is to be reached it will not be finalised for many months, well after the federal election," Smith said.
 
"Clearly because the Coalition does not support Labor’s reckless NBN we would not proceed with this arrangement if elected."

Smith said Labor was "once again trying to solve a problem by throwing billions of dollars of taxpayers' cash at it."

The telecommunications and internet industry were broadly supportive. ISP iiNet's chief Michael Malone welcomed the deal, saying his company "had always believed [the national broadband network] would be better served by having Telstra involved rather than not."

“From our initial examination of yesterday’s announcement, the agreement is consistent with the Federal Government’s earlier commitments of an open access network, structural separation and regulatory reform," he said.

Telstra will front media and analysts this morning to shed more light on the deal reached.

Stay tuned to iTnews for more as the story progresses.