Last week, Telstra got booted from the National Broadband Network process, where the Australian Federal Government will be spending about half the amount of money they (wasted) on the bogan bonus to fund/subsidise an improvement in Australia’s broadband capacity down to the last mile.
Telstra, the largest telco in the country, apparently didn’t like the concept that some Govt money in the process might mean the new network actually involves competition between the network, wholesale and retail divisions of the value chain: one network with cost recovery, then a number of wholesalers, and then lots of retailers. You know, competition on a utility.
Anyway, they submitted an incomplete report, and the Govt kicked them out of the process for non-compliance. Their share price then copped a hiding, double digit losses even in a rising market, since it is pretty clear this new network is going to be “where its at” for the next generation of Australian fixed-line internet access. The government will need to legislate to ensure the successful builder gets access to the copper and other Telstra infrastructure, and it would have been much better for them to have been in the game. But they had a dummy spit, and now the pressure has been on for them to explain their incompetence to their shareholders, including yours truly.
Here’s the letter. A lot of talk, but no explaination. What a disappointment.
As you would be aware, on December 14, the Federal Governmentâ€™s Expert Panel overseeing the National Broadband Network Request for Proposals (RFP), made a decision to exclude Telstra from participating in the process, even though we believe we are the only ones to have made a material financial commitment.
While Telstra disagrees with the decision and reserves its rights in respect of the matter, the Company will move on.
For months, Telstra has been saying that the NBN carries very significant risks and the costs of the NBN have increased with the global financial crisis. From day one, we have held firm to our principle of not taking on these risks on behalf of our shareholders without the necessary certainty around outcomes.
This weekâ€™s decision by the Expert Panel has no impact on our overall business strategy and the execution of our transformation plan. Telstraâ€™s enviable financial position and strong fundamentals are no different today than they were last week before the Expert Panel made its decision.
Importantly, there is no change to our financial guidance as a result of the Expert Panelâ€™s decision. We continue to execute on our transformation strategy according to plan. With the platforms we already have in place, we will continue to compete and innovate very effectively.
Next Gâ„¢, with over 4 million customers, is the worldâ€™s largest and fastest wireless national broadband network, which we will continue to upgrade. Early in 2009, Next Gâ„¢ will offer peak network speeds of 21Mbps with a clear roadmap to 42Mbps and beyond.
Our fixed line broadband network delivers ADSL from exchanges serving 92% of the population, with ADSL2+ providing speeds up to 20Mbps from exchanges that serve 81% of the population.
Our Hybrid Fibre Co-axial (HFC) cable broadband network passes over 2.5 million capital city premises. Big Pond Cable Extreme is available to more than 1.8 million Sydney and Melbourne homes and businesses in the HFC footprint at speeds up to 30Mbps, with speeds up to 17Mbps in all other parts of the HFC network. We are in a position to roll-out technology that is being deployed in Europe and the US, which will enable the HFC to deliver speeds of up to 100Mbps.
Next IPâ„¢, together with Next Gâ„¢, is the largest, fully integrated, national IP broadband network in the world, enabling delivery of reliable, secure and high performance IP-based services to businesses.
Regardless of what happens with the NBN, Telstraâ€™s transformation and strong financial position mean we will continue to deliver world-leading services to our customers and strong returns to our 1.4 million shareholders.