Thodey's sitting pretty on Telstra's NBN war chest

David Thodey managed to lock in a huge NBN bounty with Labor, largely because Rudd wasn't across the numbers and Conroy was anxious to get a deal done. Telstra's CEO has big plans on how to spend that money.

As time goes by it becomes clearer that the 2012 Telstra-NBN deal was one of the greatest transactions ever done by an Australian corporation with the government. For political reasons it is quoted as a deal that will produce revenue for Telstra of $11 billion in post-tax net present value. There has been much speculation as to the extent of the actual dollars that Telstra will receive over the next 20 or so years.

By chance I had the opportunity to discover that the $11bn discounted figure translates into a cash sum of around $65bn.

Yes, that’s right: $65bn.

That’s a truly an enormous sum and it was achieved because former prime minister Kevin Rudd was not really across the numbers and then communications minister Stephen Conroy was anxious to get a deal done. Moreover, they were dealing with two remarkable negotiators: Telstra chief executive David Thodey and former Telstra finance director John Stanhope.

I have no doubt that current Communications Minister Malcolm Turnbull would like renegotiate the base deal. As the arrangement covers to a fibre-to-the-node deal, details will change but all alterations will come back to what was stipulated in the base agreement. When they discover the enormity of the revenue coming Telstra’s way as a result of the deal, the institutions will want more dividends and possibly a capital return. Telstra will set out its plans for distributions and capital investment next month (Thodey's Telstra plans have huge implications for shareholders, May 23).

But there is no doubt that Telstra has detailed growth plans for Asia and Australia. Thodey says that Telstra has to move on from its current model into a very different path.

The Asian expansion has been put under the wing of finance director Andy Penn. Penn is a former chief executive of AXA Asia Pacific, which thrust deep into China and Asia before the French bought Australian equity in the Penn-developed Asian operation for a token sum. Telstra aims to help Asian telcos upgrade their networks to Australian standards.

Meanwhile, in Australia one of growth areas that Telstra sees for itself is in medical communications. Telstra believes that medical costs can be slashed with better use of systems (Should Telstra reduce its dividend?, February 14).

The second growth area involves the fact that Australian companies are increasingly using applications to deliver services and promote products. These applications must operate on different platforms and through different avenues. This growth area includes the enormous potential of cloud computing.

A final area is in media. Those with content (including Telstra) must deliver it through many different channels and many of those involve the Telstra networks.

Telstra aims to be both an income and a growth company and it can be achieved thanks to Kevin Rudd and Stephen Conroy.

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