Telstra has notified the Australian Stock Exchange that payments due to it from NBN Co for using its HFC cable network to provide NBN connections are likely to be delayed after the NBN builder announced a six to nine month halt in HFC connections.
The telco said that in its full-year results announced earlier this year, it had made projections for FY2018 assuming that the NBN rollout would be in keeping with the NBN Co corporate plan for 2017. Telstra's share price fell by 1% soon after the NBN Co announcement.
NBN Co chief executive Bill Morrow today announced the delay in allowing HFC customers to connect to the NBN due to what are said to be network issues that prevent promised speeds being delivered.
It may be recalled that the NBN Co had initially planned to use both Telstra and Optus cable for rolling out the NBN, but had to omit Optus cable as the network was not in a fit state for use.
{loadposition sam08}"Telstra will assess the effect of today’s announcement in conjunction with the NBN Co Corporate Plan 2018 on its outlook for FY18 and advise the market once that assessment is complete," the Telstra ASX announcement said.
"The delay in the NBN rollout will delay a proportion of the payments to Telstra from NBN Co into future periods."
NBN Co and Telstra signed a deal in April last year to use the latter's cable network for providing NBN services to about three million consumers.
This followed earlier agreements about various aspects of use of the network. At the time, Morrow said: "Telstra has enormous experience in HFC design and construction, and the rollout will be greatly assisted by having them as a key partner in the delivery of this part of the network."
NBN Co is paying Telstra $5 billion in infrastructure payments, $4 billion in disconnection payments and $2 billion in Commonwealth agreements for the HFC network.
In the ASX statement, Telstra acknowledged "NBN Co's core priority to protect the customer experience and will continue to work with NBN Co on this goal. NBN Co has stated that it remains confident that its long-term corporate plan can be met to connect eight million homes by 2020, including three million through HFC services.
"Telstra will keep impacted customers informed and discuss disconnection obligations with NBN Co and the Australian Consumer and Competition Commission to minimise customer impact during this period."
The Telstra-NBN Co deal states that "Telstra’s role will be limited to engineering, design, some construction, procurement and construction management. Decisions regarding the release of footprint for sale, product development, and the provision of information about the rollout will continue to be matters for NBN Co".
Reacting to the NBN Co announcement, Labor communications spokesperson Michelle Rowland posed a query to Prime Minister Malcolm Turnbull.
"The question for Malcolm Turnbull is this — what are you hiding from the Australian people about the HFC network? What have you been hiding?" she asked. “This announcement raises more questions than answers.”
Rowland questioned whether NBN Co was "seriously" telling the Australian taxpayer it had been deploying a HFC network that was not fit for purpose?
“The HFC debacle is unravelling before our very eyes," she added. "Today’s announcement raises more questions than answers.”