NBN Co and Telstra sign historic agreement.

Jun 20, 2010 2:05 PM

Telecommunications incumbent Telstra has agreed to migrate its copper and cable broadband networks to Government-owned NBN Co in a deal worth $11 billion.

The two parties have signed a financial heads of agreement, announced Sunday, that will provide NBN Co with access to Telstra's passive infrastructure (pits, ducts and backhaul fibre) and eliminate Telstra as a fixed-line wholesale competitor to the Government-owned entity.

Telstra, in turn, has been given assurance from Prime Minister Kevin Rudd that it can compete in auctions for 4G [LTE] mobile spectrum and face less regulation from the Federal Government.

The assets to be transferred as part of the deal were valued at $9 billion, whilst Telstra values the financial gain from "public policy reforms" signed as part of the agreement at $2 billion.

The $9 billion will be paid progressively as Telstra's copper network service is decommissioned and cable broadband network service deactivated. NBN Co will pay Telstra a fee for every customer migrated from these networks onto NBN Co's fibre network.

"Telstra has received written confirmation from the Prime Minister that Telstra would be able to bid for Long Term Evolution (LTE) wireless spectrum should the transaction be completed and that sufficient regulatory certainty will be provided on a range of matters for NBN Co and Telstra to enable the transaction to proceed," the telco said in a statement.

Telstra will maintain its cable network exclusively for the purposes of its Pay TV joint venture, Foxtel.

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