Telstra agrees to sell wireline network to Australian government

Telstra's (ASX: TLS.AX) ongoing nine month battle with the Australian government over its wireline assets finally came to a close today as the service provider agreed to hand over its wireline network keys to the government for $9.7 billion.

While the deal still needs shareholder and regulatory approval, the plan calls for Telstra to transfer over its customers to the government-run National Broadband Network (NBN) fiber-based open access wholesale network. Since there are still various details to be hashed out between the Australian government and Telstra, shareholders won't vote on the deal until early 2011. However, it was revealed that Telstra will be able purchase wireless spectrum for new wireless data services and won't be forced to sell off its cable TV assets.

As the government builds out the NBN, Telstra will shut down its copper-based wireline networks in stages over eight years. In addition, the NBN will get access to Telstra's ducts and trenches to build out its network.

"We have got to this position, and we're pleased to have done so because it does give us clarity and that's what this company needs," David Thodey, Telstra's CEO said on a conference call.

One group that will likely applaud the deal will be Telstra's competitors (Telecom New Zealand, Vodafone and Singapore Telecom's Optus), who have long argued that the Australian incumbent has been notoriously slow in providing access to its network and expensive fees.

For more:
- Reuters has this coverage
- Bloomberg also gives its take

Related articles:
Australian govt says it doesn't need Telstra to build the NBN
Telstra break up could be in peril
Telstra strikes out against changes to Australia's NBN plan


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