NBN Co and Telstra have come to an agreement behind closed doors to settle their 200m court case. Telstra previously sued NBN in the NSW Supreme Court over the timing of Consumer Price Index increases that were to be applied to its $11bn deal to rent infrastructure for the construction of the national broadband network. This disagreement occurred when Telstra believed the increase should apply from 2012 whereas NBN believed the delays would have the increase happen in 2013. The different assessments created the $200m disparity. The NSW Supreme Court ruled that the CPI, which refreshed every year in January, should apply to payments effective 1 January 2012, considering that the contract was signed in 2011.
Telstra said it was pleased with the July 2014 ruling. However, in August of last year NBN Co spokeswoman Karina Keisler said the company thought it deserved to win. It planned to take the decision to the NSW Court of Appeals, but later reserved its decision and settled with Telstra. “The parties have reached agreement on a commercial resolution to this matter," she said in the only statement released by either party. Further evidence of the deal was released by Fairfax Media. The document showed that high-level executives from both companies disagreed on the settlement amount but that both companies wanted to work together to get the politically sensitive deal signed. The two companies have since renegotiated the terms of the contract to reduce the financial risk of Telstra while also handing over ownership of copper phone lines and other networks to NBN.
Author: Imran Valibhoy
Apr 10, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.