Optus Seeks Transparency on Telstra Use of $11 Billion NBN Windfall

Optus sought on Thursday for Telstra to be transparent on its use of the $11 billion National Broadband Network (NBN) windfall to ensure it would not use the money to stifle competition.

The call for transparency is part of Optus' call for rules on how telcos which would be paid by the NBN would use the money that telcos would not subsidise handsets in a bid to get a larger share of the market.

The windfall is a result of Telstra's handing over its old copper network to the NBN to make way for the national broadband rollout which would create a single platform where all Australian telcos would compete on equal footing. The payment is spread over 30 years.

"We'd like a level playing field so we can play a competitive game," Optus Chief Executive Paul O'Sullivan told BusinessDaily.

Telstra previously spent $1 billion to reduce the cost of mobile plans. Rather than repeating such a marketing strategy, Optus wants its competitor to use the windfall on share buyback. Telstra Chairwoman Catherine Livingstone said in October that shares buyback would likely be a part of the firm's capital management strategies following the approval by shareholders of the NBN deal.

However, the coalition has vowed to stop construction of the NBN and implement its own policy if it wins in the next election. However, a report by Citi warned that it would be difficult and costly to initiate a major policy change since the federal government would have committed up to $15 billion in expenditures for the NBN when the next federal election takes place.

"Ceasing the NBN rollout means sinking these costs, while terminating any contracts in place is likely to incur break penalties. A tough pill to swallow," Smartcompany quoted the Citi report.

If the coalition would scrap the NBN and implement a new policy, cost would escalate to $17 billion and would delay the NBN rollout to 2018. Among the issues that would have to be addressed by the coalition are contract termination, sale of NBN fibre assets, the cancel of launches and rewriting of structural separation legislation.