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NBN Co rejects Telstra's bond plan

AAP  |  30 Aug 2017Text size  Decrease  Increase  |  

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SYDNEY - [AAP] Telstra's (ASX: TLS) plan to pay down debt and create new shareholder returns by monetising the receipts from the national broadband network has been shunned by the rollout company nbnco which says it will not support the scheme.

The giant telco announced at its full-year results on August 17 that it wanted to create an investable product based on the future income stream it gets from NBN compensation and access payments.

Chief executive Andrew Penn at the time said that if an arrangement were to go ahead, it would be worth $5 billion to $5.5 billion, with $1 billion of the proceeds used to pay down debt, and the balance--around 75 per cent of NBN income--used for shareholder returns.

But, nbnco has refused to provide the consents needed.

"While the proposal is well progressed and supported by equity and debt investors, Telstra has been advised this morning that technical consents from nbnco will not be forthcoming," Telstra said in a statement on Wednesday.

Telstra quoted the company rolling out the broadband network as saying it could not see how its position could be protected or improved by Telstra's securitisation plan.

"Especially given the unpredictability of our operating environment in the 2020s," nbn said.

The announcement came as Telstra shares went ex-dividend, signalling the last shareholder payment before a move to a lower dividend scheme.

Telstra said in its full-year results it would cut future dividends in a move to build up a war chest to protect its massive market amid growing competition.

The new policy to pay between 70 and 90 per cent of underlying profit will take 2017/18 dividends to 22 cents, from 31 cents this year.

The telco's shares were down 5.47 per cent to $3.63 at 1143 AEST on Wednesday.

 

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