Telstra Corp (TLS) and the coalition government have begun talks to renegotiate the $11.2 billion deal the telecom giant signed with the former Labor government as the new government seeks to radically redraft the national broadband network (NBN), according to The Australian Financial Review.
Telstra had signed a contract with the Labor government and NBN Co in 2012 after two years of negotiations that granted NBN Co rental access to Telstra's vast network of underground pits and ducts for the NBN rollout.
Under the coalition's proposal for a cheaper, but slower, alternative NBN, the government would have to buy Telstra's copper network to build a fibre-to-the-node system.
“We've already had preliminary discussions,” Coalition communications minister Malcolm Turnbull told the AFR.
“[The formal negotiations are] something we'll begin in earnest once we have a new board and some new management and we're able to assemble our NBN Co and government team.”
Telstra chief executive David Thodey said the company is open to the talks but will not accept a deal that the company would deem as weaker than the one it signed with Labor.
“We decided on the basis of being paid $11.2 billion we were moving on,” Mr Thodey told Telstra shareholders on Tuesday.
“The very encouraging thing Malcolm Turnbull said was that he would keep shareholders whole and that means $11.2 billion.
“If they want to change things and do different technology that's [their] decision but $11.2 billion means $11.2 billion.”
Resolving the future plans for NBN Co will reportedly trump the coalition's long-touted Commission of Audit into the country's finances at the government's first full cabinet meeting next week.
Meanwhile, The Australian reported that the federal cabinet will sign off on a strategic review of the NBN as soon as next week.
Yesterday, Mr Turnbull released an "interim statement of expectations" to NBN Co, setting new targets and asking it to keep rolling out fibre to the premises until a review is complete.