Bloomberg News

Telstra NBN Cash Could Be for Dividends, Expansion, Thodey Says

June 26, 2011

June 26 (Bloomberg) -- Telstra Corp., Australia’s largest phone company, may use the cash it gets from a deal with the government-owned high speed Internet network for dividends, share buy-backs or expanding its business, Chief Executive Officer David Thodey told the Australian Broadcasting Corp.

Telstra will enjoy “some very rich cash flows” from the deal, which includes handing over its fixed-line assets in exchange for A$11 billion ($11.5 billion), Thodey told the ABC’s “Inside Business” program today, according to a transcript of the interview. This creates an opportunity for the company to reorient itself for the next 20 years, he said.

Asked whether Telstra will use the money for acquisitions, Thodey said “we have real capital management options. We could look at our dividend policy, we could look at a buy-back program, or we can look at expanding our business.

“For the first time in this company’s history, we have real optionality going forward.”

NBN Co., the government-owned national broadband network builder, will lease access to carriers on the fiber system to be completed in 2018, with Telstra to receive its compensation over three decades, the Melbourne-based carrier said in a statement on June 23.

--Editor: John McCluskey

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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