Pension funds to eye NBN under Coalition government

Cash rich international pension funds are likely to eye the core NBN infrastructure under a two-term Coalition government.

“Carriers are unlikely to be interested in the core NBN infrastructure,” said Michael Reed, a lawyer with Allen Overy and the co-author of a recent paper examining the prospects of the NBN under a Coalition government. Reede was speaking at the CommsDay Summit, in Sydney yesterday.

“However,” he added, “the core network could be structured as an asset to appeal to pension funds.” He pointed to the recent investment of Ontario Teachers’ in Nexgen as an indicator of pension fund interest in telco assets.

Reede said in the event of a Coalition win in September, the first six to twelve months would focus on assessment and consultation about the future of the NBN. “Today’s plan,” he said, speaking of the Coalition NBN plan released Tuesday, “is intentionally simple. Don’t expect that simplicity to stay much beyond the first twelve months.”

The second twelve months of a Coalition government would focus on restructuring the NBN, with the final third of the first term looking at a possible listing or sale of the NBN core assets.

He also said the Coalition has three basic options when it comes to the NBN Co. The first option is a renewed structure, with new relationships with the carriers, and in particular a focus on leveraging existing technologies and assets, including the HFC (cable) network.

The second option, he said, is a break-up of NBN Co, with the possible structure of a rural NBN Co and a metro company focusing on highly developed areas.

“The third option,” he said, “is the future listing of the NBN Co, but that won’t happen until late in the final third of the Coalition’s first term, if not into the second term.”

The greatest area of agreement between coalition and Labor policy is in the fixed wireless and satellite used in remote and rural areas. “We think, however, there is scope for private involvement in the satellite and fixed wireless subject to existing contracts,” said Reede.

He emphasised, however, the policy introduced on Tuesday by the Coalition is very much a first step. “There is a lot of detail that remains to be seen,” he said.