Draft laws for the government's national broadband network company NBN Co could create a retailer rather than a wholesale network provider, Telstra says.
The legislation states NBN Co is to be a wholesale-only company but it gives the communications minister significant powers of discretion to allow it to conduct retail services.
In a letter to shareholders on Tuesday, Telstra said the draft legislation had for the first time raised the prospect of NBN Co becoming a government-funded retailer, not just a wholesale network provider.
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"Such an outcome would run counter to the core purpose of the NBN and the government's primary policy objective of restructuring the industry to have separate providers for retail and wholesale fixed network services," Telstra chairman Catherine Livingstone and chief executive David Thodey said in the letter.
"We are very concerned about this potential change in the government's position."
On February 24, the government released draft legislation that would govern how NBN Co is operated and regulated.
The draft laws allow NBN Co to offer services directly to certain end-users and to purchase other communications companies even if they have retail businesses.
This would allow NBN Co to compete directly with retail providers such as Telstra and Optus that would be buying its wholesale services.
"If enacted, we would need to factor this into the financial consideration required to achieve an agreement that is in the company's and your best interests," Telstra said of the legislation in its letter to shareholders.
Telstra also said that its position on the Telecommunications Legislation Amendment Bill 2009 had not changed.
"We have always said this legislation is likely to destroy shareholder value and makes an agreement with NBN Co and the government harder to achieve."
Telstra is negotiating with the government and its NBN Company on the implementation of the $42 billion high-speed broadband project, which could see some of Telstra's infrastructure integrated into the network.
The government is committed to breaking up Telstra's retail and wholesale arms in an effort to introduce greater competition into the telecommunications sector.
