No outcome from much anticipated Australian NBN announcements. Optus’ (and all other) proposal(s) have been rejected by the Australian Government. The government’s new and upscaled NBN vision discusses regulatory reform in tandem with network-rollout, a longer term positive for competition (i.e. Optus) but will take time to materialise in any specifics.

New and upscaled NBN vision. FTTP build in partnership with private sector to deliver 100Mbps downlink to 90% of population. Total cost seen at A$43bn over eight years with govt. as major SH (initial funding of A$4.7bn as well). Private sector invited to invest (up to 49%) - invitation to all including Telstra.

Regulatory reform. Govt has promised significant regulatory reforms, however at this stage only a discussion paper with submissions by 3rd June. Reform options include: (i) functional separation; (ii) cross media controls or disposal of HFC network; and (iii) stronger ACCC powers. All imply tougher regulations for Telstra, by consequence longer term positives for competition (incl Optus).

What happens next? (i) Regulatory submissions (June 09); (ii) legislative changes (c.2H09); (iii) implementation study to determine operating arrangements for FTTP (Dec 09); and (iv) network build (early 2010e).

In conclusion. (1) Stake in a consortium (as envisaged by govt now) always SingTel’s preferred option, in our view – we think SingTel will be a participant if terms and conditions are right. (2) Market concerns around additional funding into Optus (as part of NBN) should abate for now.