[AusNOG] NBN - Negotiations with Telstra - update from DeLimiter

[Matthew Moyle-Croft]

If you're the Australian government and can borrow the money through
bond sales (look at the current rates for bonds) then given how
profitable Telstra (look at dividends and free cash flow etc) is you'd
make a profit on holding it.

So, reality is it doesn't matter how long other than your particular
political views on governments borrowing money to invest etc etc.

But you'd hope that you could do it fairly rapidly.  Keeping "an" NBN
on track is important.

MMC


On Sun, Sep 8, 2013 at 11:19 PM, Nathan Sullivan <nathan at nightsys.net> wrote:
> Interesting...
>
> The main interesting part of that equation would be how long does the Govt
> have to "hold" Telstra and repay debt to facilitate the split into InfraCo +
> other entities before it can sell them off and repay debt/s... in terms of
> time = interest payable. 6 months? 12 months?
>
> Theres probably a lot of legacies, in terms of systems, asset registers,
> payroll splits that would need to be dealt with during that time.
>
> Nathan.
>
> On Mon, Sep 9, 2013 at 4:17 PM, Matthew Moyle-Croft <mmc at mmc.com.au> wrote:
>>
>> Also,
>> Govt already promised to pay Telstra ~$11B or so to move customers
>> across - if buying Telstra and splitting it costs you that or less,
>> then you're winning.
>>
>> On Sun, Sep 8, 2013 at 10:20 PM, Matthew Moyle-Croft <mmc at mmc.com.au>
>> wrote:
>> > On Sun, Sep 8, 2013 at 8:29 PM, Martin - StudioCoast
>> > <martin.sinclair at studiocoast.com.au> wrote:
>> >
>> >> What are others thoughts on this? What other cost saving measures are
>> >> out
>> >> there?
>> >>
>> >
>> > Go the insane private equity (but government) approach:
>> >
>> > 1. Borrow money from markets on short term basis to repurchase Telstra
>> > from existing shareholders. (need AU$60Billion + premium).
>> > 2. Break Telstra down into component parts - including one
>> > owning/running the last mile (Cu, ducts, Exchange buildings, HFC etc).
>> > "InfraCo"
>> > 3. Sell all the bits other than InfraCo - probably worth about the
>> > right amount to pay back money borrowed as no longer encumbered with
>> > ugly bit of last mile that needs mucking with, if not, lumber Infraco
>> > with the debt.
>> > 4. Setup InfraCo to do what it needs to building whatever you need to
>> > build.  It owns everything it needs and is govt owned.  No negotiating
>> > with anyone.  Don't have to argue about technologies etc.  It can have
>> > a look at what it's got and do what it needs to do relative to a
>> > political dictum about services it needs to provide.
>> >
>> > So, money's pretty cheap to borrow internationally for short term.
>> > Australia has AAA ratings so borrowing it should be pretty
>> > straightforward.  InfraCo remains initially government owned so AAA
>> > rating is fine.
>> >
>> > Given the "cost" is really just what the difference is between
>> > acquiring Telstra and then selling the bits InfraCo doesn't need it's
>> > probably cheaper.  Infraco starts with a customer base so you just set
>> > it up so it can afford to roll out high speed over X timeframe.  Also
>> > means that if you want to sell it then you have no issues other than
>> > selling a govt monopoly which is a problem we already have.
>> >
>> > MMC
>> _______________________________________________
>> AusNOG mailing list
>> AusNOG at lists.ausnog.net
>> http://lists.ausnog.net/mailman/listinfo/ausnog
>
>