Telstra sues NBN Co over $11.2bn contract

Telstra is suing NBN Co in the NSW Supreme Court over a dispute regarding the $11.2 billion deal the two companies signed in 2011.

As part of the $11.2 billion contract signed in June 2011, NBN Co has rental access to Telstra’s pits and ducts, through which NBN Co is planning to run cabling for the National Broadband Network.

But now, the two companies are arguing over how far back parts of the contract should reach - a distinction that could mean many millions of dollars for Telstra.

Telstra reportedly believes that CPI adjustments should have come into effect on 1 January 2012, following the June 2011 signing of the two companies’ binding Definitive Agreements.

NBN Co, on the other hand, believes CPI should only be counted from 1 January 2013 - one year later - because the structural separation undertaking that Telstra had to submit to the ACCC wasn’t accepted until March 2012.

“We have one take on the contract and NBN Co has another. We have not been able to reach agreement through a long mediation process, so, as provided for in the contract and as the next step, Telstra is asking the court to decide,” a Telstra spokesperson said.

A spokesperson for NBN Co said the company would rely on the court’s decision, according to the AFR.

Commentators have speculated that if the court finds in favour of Telstra, the telco could get between $100 million and $150 million.

A directions hearing has been scheduled for 8 November.

Image courtesy of Telstra