Telstra hopes to sway shareholders towards working with government broadband network

Australia’s leading communications firm Telstra will be A$4.7bn (US$5bn) better off by working with the government on its new high-speed broadband network rather than competing against it, according to an independent expert—albeit one commissioned by Telstra.

The Australian incumbent shared the views of independent outfit Grant Samuel with its shareholders ahead of a vote on October 18th on its plans to hand over its fixed-line assets to the government’s A$38bn National Broadband Network (NBN Co).

“Overall, the advantages of the proposal outweigh the disadvantages. Accordingly, in Grant Samuel’s opinion, the proposal is in the best interests of Telstra and its shareholders,” the investment and advisory group said. Grant Samuel estimated that Telstra would save A$3.5bn by not having to invest in its own networks to compete against the NBN, and, overall, would be A$4.7bn better off by cooperating with it than by working against it.

Australia’s conservative opposition party, which is currently favoured to win the next election due in 2013, are against building the broadband network.

Malcolm Turnbull, the Australian Shadow Minister for Communications and Broadband , recently told that a more rational government would have undertaken a rigorous cost benefit analysis and seek to find the fastest and most cost effective means of achieving it.

“Instead, the Labor Government, without any such analysis, resolved to build a completely new fibre to the home network to reach 93 per cent of Australian households and to do so by means of establishing a new Government-owned telecoms monopoly which would become the sole fixed line means of delivering connectivity to Australian homes and businesses,” he said.

“As a consequence Australia is spending, or proposing to spend, more public money on broadband than any other country in the world. And whereas other countries seek to encourage facilities based competition, our Government has taken steps to eliminate it.”

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