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Telstra chief reassures investors

On Monday retail shareholders of Telstra (ASX: TLS) were given an insight into the thinking of its chief, David Thodey, on the subject of the NBN, its future and paying bills.

This week it was revealed that the entire NBN Co’s board agreed to resign amid claims they did not have the confidence of the government and Communications Minister Malcolm Turnbull. This has raised more questions than it answered for Telstra which has a major role in the country’s biggest infrastructure project in years.

When prompted about the changes to the NBN contract and the company’s requirement during the rollout Mr Thodey said, “We, as a company… made the decision that for $11 billion we were willing to let the government take over and we would move on to other things.”

Under that contract however Telstra was to be paid for disconnection, infrastructure access payments and required it to become a pure retailer. Mr Thodey told shareholders that the technology used in the rollout didn’t matter to him, “it’s the government’s decision, not mine” as long as the company continued to move forward. “I’m moving on. We’ve got to move this company forward, not being pulled back here every four years and to another change… it’s [the government’s] responsibility”.

According to The Sydney Morning Herald, negotiating a new agreement with the current government might prove tedious and drawn-out for both parties but the Coalition has promised to keep shareholders “whole” – meaning they will be no worse off under a new agreement. Although it will not disadvantage shareholders, Chief Financial Officer Andy Penn said it remained one of the biggest risks going forward.

When quizzed over whether or not the company expected to increase or maintain its dividend, Mr Penn said future dividends would depend on earnings.

Pay your debts… or else

Yesterday, Mr Thodey continued to defend Telstra’s handling of the ispONE saga, calling it “unacceptable” and said it had done “far more [for customers] than other operators”.

ispONE is a Melbourne-based Telstra reseller that was recently put into administration after its debts totalled into the tens of millions. It gave customers cheap access to Telstra’s network through outlets such as Kogan and ALDI. Telstra says ispONE owes it $30 million because it couldn’t pay its bills, “from our perspective, we lost a lot of money [and] you lost a lot of money as a shareholder because [ispONE] did not pay its bills’.

Assets from the company were recently sold for $1.75 million to Melbourne’s Conec2. However, according to The Australian Financial Review, Telstra isn’t the only one claiming it’s owed millions of dollars. Kogan says it’s owed around $44 million in debt whilst Optus is after $2.8 million.

Foolish takeaway

Telstra shareholders have enjoyed solid gains over the past two years and long-term holders have been rewarded with excellent dividends. With the change of government, shareholders will have many questions on the future of the NBN deal and Telstra’s requirements under it. However, since taking over the company Mr Thodey has done a good job enhancing both customers’ and investors’ satisfaction with the company. Shareholders can rest easy knowing that competent management is at the helm of this great Australian company.

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Motley Fool contributor Owen Raskiewicz does not have a financial interest in any of the mentioned companies.

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