Telstra CEO Bleats Hardship While Raking Billions In From The NBN
Andy Penn the CEO of Telstra has spent this week bleating on about the high wholesale price of the NBN but what he failed to outline in his blog earlier this week, then in his speech to the National Press Club yesterday was that that Telstra is milking the NBN for billions and that since 2011, $8bn dollars has been paid by the NBN direct to Telstra for access to their pits and cable infrastructure.
These massive payments to Telstra are now built into the price that the NBN charges carriers.
Penn has also failed to talk up the fact that Telstra will collect $1 billion a year for the next 28 years from the NBN revenues, this is income that his competitors are not getting.
The money is a combination of rents for infrastructure and for the transfer of customers from the Telstra network to the NBN.
This means that each time a Telstra customer is moved over to the NBN Telstra get a click of the ticket.
What Penn now wants is for the NBN to drop the wholesale price of the NBN from around $42 to $20 meaning revenues would fall from $2bn to $1.2bn while at the same time still getting $2.4bn from the NBN Co.
Speaking at the National Press Club in Canberra yesterday, Mr Penn said removal of the high wholesale costs imposed by NBN Co was not only crucial to the financial viability of the Federal Government owned project but would also encourage investment in the sector. “It’s unprofitable for operators like Telstra to resell NBN,” he said.
The stark reality is that the NBN has been highly profitable for Telstra and some could say was the saviour of Telstra who are struggling in several markets, have tired retail outlets, have failed to deliver Connected Home technology similar to what Asian carriers are doing while also facing shrinking smartphone sale
Telstra’s rivals rightly claim that it is Penn and the Telstra management team who negotiated the NBN deal who are to blame for the high price of the NBN.
What the NBN is doing is rolling out a communication network across a vast continent, while having to recover the costs from only 25 million people.
After taking in hundreds of millions of dollars a year from the NBN Penn who was the chief architect behind the sacking of 10,000 Telstra employees is now trying to extract more money from the Federal Government for so called Rural initatives.
Penn’s Press Club speech called for a playing field compared to the tech giants like Uber, YouTube and Facebook, which are not subject to the same regulations as Telstra.
John Durie writing in the Australian said that these organisations are not subject to the same rules as the media companies, which was the point hammered home by the ACCC in its report to government last week.
‘It’s when he gets talking about the NBN that Penn amazes mere mortals at his ability to keep a straight face when complaining about its pricing’ Durie wrote.
As Penn noted on the subject, “an uneven playing field when it comes to regulation is bad for competition and bad for customers”.
Penn who has a reputation for using selected data to try and prove a case was at it again yesterday claiming that the NBN is costing him $3bn a year in earnings. That’s a case of selective use of data, but Penn rejects this line and says the sum accounts for the government handouts.