David Bird
17-02-06, 03:03 PM
TELSTRA is likely to proceed with its next generation broadband network regardless of the regulatory outcome it receives, an analyst says.
Goldman Sachs JBWere analyst Christian Guerra said broadband was critical to Telstra's future and Australia's largest telco could not afford to abandon the fibre to the node (FTTN) rollout altogether.
"We believe Telstra will proceed with its FTTN plans, whatever the regulatory outcome, despite the fact that the company has specifically stated otherwise," he wrote in a report.
"Any decision by Telstra to abandon FTTN would have a significant negative impact on the value of the company."
Last December, Telstra put on hold its plans to roll out the new fibre network after the federal government indicated it would allow rival telcos to access the cables.
A rollout of the new network would dramatically increase broadband availability and speeds in the major capital cities.
FTTN would cost $2 billion over three years and would involve putting new fibre cables between the telephone exchanges and local "node" cabinets in five capital cities, capable of reaching four million people.
Currently, only houses within 1.5km of their local exchange are able to get top broadband speeds through the copper phone lines.
Telstra only wants to roll out FTTN if it has reasonable regulatory protection for its use of the new cables in order to guarantee an appropriate return on its investment.
A spokeswoman for the Australian Competition and Consumer Commission (ACCC) said the regulator was in frequent discussions with Telstra on a range of matters, but currently has no specific inquiry into FTTN.
Goldman Sachs JBWere believes there is a range of possible regulatory outcomes, depending on the sort of access that rivals could have to the new fibre cables.
The most likely outcome was for other telcos to have full access to the service at the top speed of 12 Mbps.
"This is the outcome Telstra fears the most," Mr Guerra said.
However he was so sure that Telstra would still go ahead with FTTN that he has incorporated it into his forecasts.
"If Telstra abandons FTTN, our $4.30 valuation would decline by about 5 to 7 per cent," he said.
FEBRUARY 17, 2006
Source (http://australianit.news.com.au/articles/0,7204,18177755%5E15320%5E%5Enbv%5E,00.html)
Goldman Sachs JBWere analyst Christian Guerra said broadband was critical to Telstra's future and Australia's largest telco could not afford to abandon the fibre to the node (FTTN) rollout altogether.
"We believe Telstra will proceed with its FTTN plans, whatever the regulatory outcome, despite the fact that the company has specifically stated otherwise," he wrote in a report.
"Any decision by Telstra to abandon FTTN would have a significant negative impact on the value of the company."
Last December, Telstra put on hold its plans to roll out the new fibre network after the federal government indicated it would allow rival telcos to access the cables.
A rollout of the new network would dramatically increase broadband availability and speeds in the major capital cities.
FTTN would cost $2 billion over three years and would involve putting new fibre cables between the telephone exchanges and local "node" cabinets in five capital cities, capable of reaching four million people.
Currently, only houses within 1.5km of their local exchange are able to get top broadband speeds through the copper phone lines.
Telstra only wants to roll out FTTN if it has reasonable regulatory protection for its use of the new cables in order to guarantee an appropriate return on its investment.
A spokeswoman for the Australian Competition and Consumer Commission (ACCC) said the regulator was in frequent discussions with Telstra on a range of matters, but currently has no specific inquiry into FTTN.
Goldman Sachs JBWere believes there is a range of possible regulatory outcomes, depending on the sort of access that rivals could have to the new fibre cables.
The most likely outcome was for other telcos to have full access to the service at the top speed of 12 Mbps.
"This is the outcome Telstra fears the most," Mr Guerra said.
However he was so sure that Telstra would still go ahead with FTTN that he has incorporated it into his forecasts.
"If Telstra abandons FTTN, our $4.30 valuation would decline by about 5 to 7 per cent," he said.
FEBRUARY 17, 2006
Source (http://australianit.news.com.au/articles/0,7204,18177755%5E15320%5E%5Enbv%5E,00.html)