Telstra 'price gap' is no bluff: Ovum

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Telstra 'price gap' is no bluff: Ovum

Not just a negotiation tactic.

Telstra has warned shareholders of a "significant gap" between how much the telco should be paid to sell its assets to NBN Co and how much the Federal Government is willing to pay.

Telstra made a statement to shareholders this morning, confirming negotiations were ongoing and that it remained "engaged with the Government and NBN Co to achieve a timely outcome that is in the interests of the company and its investors."

"Currently there is a significant gap between Telstra and NBN Co on what each party considers to be an acceptable financial outcome and there are also a range of commercial matters that are yet to be agreed," Telstra said.

"In addition, Telstra is discussing ways in which the gap can be bridged, recognising that the Government has highlighted the national interest benefits of the NBN and reform of the telecommunications industry."

Telecommunications analyst David Kennedy told iTnews that the statement was more than just "tactical bluffing. He said it was "clear there's a distance between [the two parties] in terms of asset valuation."

"Telstra really does have a hard limit to what it can concede there," Kennedy said.

"They'd simply be in breach of their duties to transfer assets at what they consider to be less than the market value.

"Doing so would open them up to shareholder action."

The Competitive Carriers Coalition, however, described Telstra's statement as "little more than an extortion note to the Government."

"It is clear that NBNco has refused to pay an inflated price for Telstra's assets, so Telstra has declared it is going to continue to frustrate good policy unless it is paid-off by taxpayers," the coalition said.

Comment was being sought from the Department of Broadband, Communications and the Digital Economy.


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