By Lucy Battersby
Telstra’s chief executive David Thodey has urged shareholders to support the telco's $11 billion deal with NBN Co, as the company's shares posted their biggest jump in a decade to push the price to a four-month high.
Telstra shares rose 11 cents, or 3.4 per cent, to close at $3.34, after earlier jumping more than 7 per cent.
‘‘For two institutions like Telstra and the government to enter into a heads of agreement, we do not do that lightly,’’ Mr Thodey said. ‘‘[We] do it with the intention of concluding it.’’
Shareholders would be given the chance to vote on the deal in early 2011, once all the details were finalised, Mr Thodey said.
‘‘We believe we have calculated a fair value consideration for the company and shareholders,’’ chief financial officer John Stanhope told analysts and journalists in a conference call this morning.
Finalising the heads of agreement announced yesterday gave the company’s capital management and allocation more certainty and would reduce capital expenditure costs on the copper network, Mr Stanhope added.
However, the company has not yet finalised whether it would pay shareholders any special dividends from the cash windfall, but Mr Thodey said money would be invested in developing new revenue streams.
‘‘Obviously the NBN environment changes the competitive landscape in which we will be operating in the next years... This milestone really has given us the opportunity we need to be able to move which ever way we want to,’’ Mr Thodey said.
He added he was comfortable with government assurances that NBN Co would not be offering retail services, as so would not be competing against other telecommunications providers.
At least 10 staff had been working full time on the deal, but Mr Thodey would not say how much the negotiations had cost the company.
However, he did say the government had driven the timing of the deal and announcement. The government will try and get legislation supporting this deal through the Senate this week, before an eight-week parliamentary break starts.
The Australian Competition and Consumer Commission is yet to approve of the deal announced yesterday, or set an appropriate NBN wholesale price.
However, Telstra confirmed this morning it would access the fibre network at the same price as other retail providers.
The $11 billion deal did not include any income which Telstra could make from constructing the NBN. NBN Co is yet to announce which companies have won tenders to construct the first mainland test sites.
lbattersby@theage.com.au