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Tea leaves or chicken guts ­ any way you read the auguries it looks as if Telstra has spun 180 degrees to restore good relations with the Government and the wider Australian community. Or so analysts would suggest. Look for likely cooperation with the Government’s NBNCo, they predict.

The latest deciphering comes from Goldman Sachs JBWere’s analyst Christian Guerra who, in a report to clients, suggests Telstra may be willing to sell or lease not only its copper network but also what he calls the “passive”
network: the holes and tunnels in roads in which the copper is buried.

That would reduce the capital cost of the National Broadband Network by at least $6 billion and speed up its rollout by years, he estimates. (Others
demur: claiming the Government already has the right to space in those holes in the ground).

Merrill Lynch analyst Alice Bennett also scents a deal. In a note to clients, she suggests the Government will try to get access to Telstra’s copper network, although most experts say it is obsolescent and fibre-to-the-home will eventually render it history.

Goldman Sachs’ Guerra suggests either an ”AssetCo” model, in which Telstra vends or leases its copper network and ducts and pipes, but retains ownership of the copper; or the ”NetCo” model, in which Telstra sells its entire last-mile access.

Crikey.com, which broke the story, quotes Goldman Sachs as saying the major obstacle to any deal has been removed.

“The cleanout of Telstra’s management and board has removed the obstructionist strutters in Sol Trujillo and chairman Donald McGauchie,” the uninhibited Crikey report says. “The Federal Government [now has] a better chance of reaching a commercial settlement with Telstra.

“The best deal is a lease or some variation of Telstra’s existing ‘passive network assets’: the ducts, pits and pipes leading into every home in Australia.

“That will lower the cost, remove an argument with Telstra over compensation if a fibre [goes] into every home, bring forward the start date by four or five years and improve the financing and operating costs.

“For Telstra, the deal offsets the loss of their declining copper network business, leaves it with not only an income stream but a growing high-speed network to match its newish digital backbones in cable, optic fibre and wireless.” ­ John Stackhouse


 

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