INTERNET group Telstra has agreed an A$11bn (£6.5bn) deal with the Australian government to roll out a national broadband network, after nearly a year of negotiations.
The company, which was part-owned by the State until 2006, will replace its copper and cable internet network with a fibre-optic service and lease it back to the Australian government.
An agreement with the owners of Australia’s only internet network was vital for Kevin Rudd’s government, in order to fulfil an election pledge to provide faster broadband across the country.
Telstra chairman Catherine Livingstone said the deal was an encouraging milestone. “This agreement reflects a commitment by all parties to reaching a mutually beneficial outcome for Telstra investors, customers, employees and the industry,” she said.
The proposed transaction will cost an estimated A$43bn (£25.5bn) and take around eight years to complete.
Telstra stands to earn A$9bn from building the network, plus A$2bn in relief from current universal service obligations.
The current deal allows Telstra to keep its lucrative majority stake in TV firm Foxtel, which the government had threatened to forcibly dismantle.
The government is still pursuing legislation to break up the company into its wholesale and retail operations.
The deal must still be approved by the Australian competition body and Telstra shareholders.