The Australian government and Telstra Corp. (TLS) Thursday said they have signed definitive agreements that will see the telecoms giant sell its existing fixed copper lines into the country's 36 billion Australian dollar ($37.94 billion) national high-speed broadband network. The agreement marks a key milestone in the development of the largest infrastructure project in Australian history that's expected to deliver the country's largest telco about A$11 billion in compensation over time for handing over its infrastructure.

It also moves Telstra one step closer to a structural separation of its businesses where its wholesale and retail operations will be split. "Telstra's structural separation is the holy grail of microeconomic reform in the telecommunications sector," Stephen Conroy, minister for communications told reporters, describing the agreement as a "game changer". Australia's ruling center-left Labor party has proposed what it's dubbed the National Broadband Network, or NBN, to make the country's data and mobile phone connections among the world's fastest, transforming it from a relative technology backwater into a high-tech modern economy. To be built over the next eight years, the network has been designed to reach 93% of Australian premises with speeds of 100 megabits per second and the other 7% through satellite at 12 megabits per second. It's not popular with Australia's conservative Liberal-National opposition, which says the network costs too much and wants more private sector investment and they have pledged to unwind the structure. As anticipated, Telstra said it expects to incur cash expenditure to support the arrangements of about A$2 billion including on necessary work on infrastructure and customer migration costs. Given the projected phasing of the network rollout, the impact of these costs on Telstra's financial profile in the 2012 financial year isn't expected to be material, it said. The deal still needs the approval of Australia's competition regulator and Telstra shareholders, scheduled to vote Oct. 18. "The decision to participate was made on the basis that the proposed transaction is expected to provide us with the ability to recover more value for the business than the available alternatives, given the loss of value after the NBN policy announcements," Telstra Chairman Catherine Livingstone said in a statement.

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