Telstra wins new multimillion-dollar NBN contracts

Telstra is set to support the NBN network build under new, multi-year contracts announced today worth $80 million in the first year.

Under a memorandum of understanding, Telstra will support the network build in areas covered by its hybrid fiber-coaxial (HFC) footprint. Telstra has also been awarded maintenance contracts.

NBN revealed it was having similar discussions with Optus.

NBN chief executive Bill Morrow said: "To optimise the network build and provide access to an excellent service for Australians, united partnerships with the construction and telecommunications industry are a key priority. 

The multi-technology plan faced recent controversy after NBN's $800 million purchase of the HFC network of rival carrier Optus, with leaked documents suggesting the poor condition of the network would lead to a cost blow-out of up to $375 million to overbuild the degraded network across 470,000 Optus HFC premises in 65 service areas.

The two new Telstra contracts – one three years, one four – are expected to be signed in early in 2016, with work anticipated to commence shortly after.

The telco will undertake "some early works" to support the HFC project while the contract is negotiated, including preparing Telstra NBN exchange locations and HFC planning and design work.

Under one contract, covering three years, Telstra will fix faults on the copper network and undertake a small number of new connections for services yet to transfer to the NBN.

The second contract, over four years, relates to fixing faults and connecting new services on the NBN for the fibre to the node (FTTN), fibre to the premises (FTTP), fibre to the basement (FTTB) and HFC technologies in select areas once a customer has migrated to the NBN. This revenue is expected to grow in subsequent years. 

The two contracts have an estimated combined first year revenue of $80 million, with the revenue to decrease "in alignment with the NBN network build". 

Telstra chief executive Andrew Penn said: “I am delighted that we have an opportunity to support NBN by leveraging Telstra’s knowledge and experience in network design and construction management, as well as continued maintenance. We have said all along that we are committed to providing whatever commercial services NBN needs to meet its business objectives.

“We have already engaged in work with NBN such as the successful 1000-node trial including FTTN node design and construction and further design work under NBN Planning and Design Services Agreement.

“We look forward to working with NBN to finalise the MOU and help bring the NBN network to millions of HFC customers,” said Penn.