Telstra takes NBN Co to court over payment dispute

Dispute surrounds $11 billion contract between the two companies

Telstra is taking NBN Co to court because of a dispute surrounding the $11.2 billion contract that allows NBN Co to lease Telstra's ducts and pit for the fibre-to-the-premises National Broadband Network (NBN) rollout.

Under the contract, NBN Co is required to pay Telstra to lease its infrastructure, as well as pay to move customers onto the NBN.

While both companies had signed the agreement in 2011, it wasn't until 2012 that Telstra's shareholders approved the contract.

Telstra said in a statement that it is taking legal action against NBN Co because Telstra believes that these payments should be indexed from 2011 when the agreement was first signed, while NBN Co believes it should begin from when the contract was approved in 2012.

"We have one take on the contract and NBN Co has another," said Telstra spokesperson Nicole McKechnie.

"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."

It has been suggested that the difference between the disputed price could about $100 million, with Telstra saying only: "The impact to us over the term of the agreement is significant, but not material from a market perspective."

The new NBN

With the change of government in September came the change of the type of NBN, and the current state of the network is currently under review.

Under Communications Minister Malcolm Turnbull, NBN Co will need to renegotiate its contract with Telstra to move the NBN to a fibre-to-the-node model.

In its statement, Telstra was quick to point out that the timing of its action had nothing to do with the renegotiations.

Telstra did say, however, that "resolving this disagreement will help provide greater certainty, and as such may assist future policy discussions."

The case will be headed to the NSW Supreme Court on 8 November for a directions hearing.

  • To keep up to date with the fluctuating state of our NBN, head on over to our guide to the NBN.