Wednesday, September 29, 2010

Australia - Carlos Slim has called the NBN too much, at AUD 7,000 per home

[the australian] THE world's richest man, Mexican telco tycoon Carlos Slim Helu, said today Julia Gillard's $43 billion National Broadband Network seems expensive.

Mr Slim, speaking at the Forbes Global CEO Conference in Sydney today, said: "It's too much money.

"It is not necessary to invest so much money, because technology is changing all the time," he said.

Mr Slim said $7000 a home to connect about six million homes was too expensive.

And he criticised the reliance of the project on fibre, emphasising the need for wireless services.

"You need to have a multi platform of everything; mobile, landline, fibre, cable and copper," he said.

"You need to have all these. You need to have a very good fibre network and rings and you need to have a loop of fibre to sustain when you have a problem in one place that the communications don’t get interrupted.

"But with copper and cable you can give 20 or 30 MhZ. I think fibre is not enough. You need to have a good network of wireless. "

Mr Slim controls Telmex and Telnor phone companies in Mexico and also has a stake in The New York Times Co.

The NBN is a fibre optic cable network to be rolled out across Australia at an estimated cost of up to $43 billion.

Communications Minister Stephen Conroy later hit back at Mr Slim's suggestion that the NBN was too expensive.

“Mr Slim's comments about the NBN are no surprise given he has become the world's richest man by owning a vertically-integrated monopoly,” Senator Conroy said.

“Mr Slim has clearly not read the implementation study and we will forward him a copy.

“The implementation study provides a detailed analysis of the cost to deliver the NBN.

“The study found that the $43 billion total capital cost is a conservative estimate and there are opportunities to significantly reduce the build cost. The heads of agreement between NBN Co and Telstra will also reduce the cost of the build by billions.”

Senator Conroy said fibre to the home was the “optimal future-proof technology” with a lifespan of 30-50 years, while wireless was a complementary technology that would never match it.

“According to the implementation study, NBN Co will generate sufficient earnings by the end of year seven so that the investment required by government will peak at $26 billion, of which $18.3 billion will be required over the next four years.

“The implementation study confirms that the NBN Co can develop a strong and viable business case, generating stable and positive cash flows, and that the government will get a moderate return on its investment sufficient to cover its cost of funds.”

Mr Slim’s comments came after Telstra today said it wanted to finalise the terms of its $11 billion NBN deal by this Christmas.

David Thodey, the chief executive of the telecommunications giant, said he would then present the NBN participation deal for a shareholder vote by the first half of 2011.

It was towards that end, Mr Thodey told investors at its annual strategy day in Sydney, that Telstra hoped to finalise the terms of its participation by the end of this year.

The CEO said many variables could affect the timing of the deal, which will see Telstra paid $9bn to migrate its traffic to the NBN as it decommissions its copper network and leases its infrastructure to expedite the new network build, but he was hoping that a definitive agreement could be formed by Christmas.

“We need regulatory certainty and this is a fundamental tenet to this deal being finalised.

“There is still a lot of work to be done but we are actively working to get final definitive agreements and I'm pleased with the progress we are making,” Mr Thodey said.

“I would like to get them done by the AGM - that is our target. But if we could get agreement away by Christmas that would be tremendous.”

Mr Thodey told investors that the legislation designed to reform the telecommunications regulatory regime and laws to set the operating conditions of the NBN Co would need to be passed before a shareholder vote could be taken on the $11bn deal, but he said the final form of the deal could be agreed to before passage of those bills.

“In terms of the definitive agreement we want to conclude negotiations as soon as we can because that is not dependent on legislation. If the legislation is introduced later this year, or early next year, there is a good possibility that we could get it to shareholders by the middle of next year.

“The CCS (competition and consumer safeguards) bill contains a number of things we don't like and we are working to get those changed.

“Work is progressing well on these.”

Some of those changes include the removal of caveats that threaten to deny Telstra access to the wireless spectrum it needs to evolve its Next G mobile network, and legislative threats to force the divestiture of Telstra's stake in Foxtel.

Mr Thodey also assured investors today that Telstra could comfortably maintain its dividend payment in 2010-11.

His comments came as Telstra outlined plans to spend $1 billion revitalising its business.

“Telstra's board has always been acutely aware of the importance of dividends to shareholders. Because of our strong free cash flow, Telstra could comfortably fund a 28 cent share dividend in 2010-11,” Mr Thodey said.

There had been some concerns that Telstra, the nation's biggest telecommunications group, might cut its dividend payment as it battles tough competition in its key markets and sliding revenues in its once-core fixed line phone business.

Telstra shares have been languishing around all time lows amid concerns about its outlook.

Gillard's National Broadband Network expensive, warns Carlos Slim Helu at Forbes conference

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