The Australian Shareholders Association has signed off on the multi-billion dollar deal with NBN and is pushing hard for approval, which will see the telco surrender its fixed line copper network and customers to NBN Co.
Click to enlarge
In return, Telstra will get millions of dollars worth of contracts from the national broadband company and a sweet $11 billion payout.
The Telstra/NBN deal agreed earlier this year, also includes the leasing of the telco’s pits and cuts infrastructure to Mike Quigley’s NBN Co.
The ASA sign off comes less than a week ahead of Telstra’s AGM, kicking off Tuesday, 18 Oct next in Sydney.
The group which has about $150 million stake in the telco or 10,000 proxy votes feels it is the best deal available, saying “we can only assume…management negotiated hard for it” but is also pushing broad shareholder approval for the lucrative agreement, in a report released to members.
“We believe that it is important that all shareholders express their support for this transaction and the board by voting ‘for’ and thus give the board some bargaining power if it should be required in future negotiations with government,” the ASA members report stated.
Shareholder approval by Telstra investors is vital if the deal is to go ahead, as planned. There had been wide fears approval would not be forthcoming, halting its Structural Separation Undertaking and Draft Migration Plan which outlines the break up of the giant’s retail and wholesale arms.
“Telstra has no choice on the NBN issue because unfortunately there is no alternative,” ASA CEO Vas Kolesnikoff told The Australian.
“It’s a pretty clear government directive and the issue is whether Telstra has the best value for that, and we can only assume that with $11bn in NPV (net present value) coming their way the management and board have negotiated hard for it.”
However, other are not so happy about the NBN deal and proposed break up of its rival, including Optus, who claim it will give David Thodey’s telco”systematic long-term advantage on the NBN.”
Others including TPG and iiNet have also ganged up on Telstra, claiming the deal will lead to more uncompetitive pricing on Telstra’s wholesale business.