-amp 39Significant gap' on NBN talks- Telstra

Telco Telstra Corporation Ltd says there is a significant gap between it and NBN Co on the proposed financial outcome of the proposed national broadband network (NBN).

`

Telstra said on Friday that recent media articles had speculated on the status of Telstra's talks in relation to the NBN.

Telstra said the talks, which are focused on the future of Telstra's fixed local access network and associated matters, were continuing.

Telstra, the government and NBN Co were approaching the talks on a "business-to-business basis".

"Currently there is a significant gap between Telstra and NBN Co on what each party considers to be an acceptable financial outcome, and there are also a range of commercial matters that are yet to be agreed," Telstra said in a statement to the Australian Securities Exchange (ASX).

Telstra also was discussing ways in which the gap could be bridged, recognising that the government had highlighted the national interest benefits of the NBN and reform of the telecommunications industry.

Telstra said a range of legislative changes and regulatory approvals would be needed for an agreement to be implemented.

"Telstra remains engaged with the government and NBN Co to achieve a timely outcome that is in the interests of the company and its investors," Telstra said.

"As Telstra has noted, should an in-principle agreement be reached and the Telstra board recommends a significant change to the nature or scale of Telstra's activities then, subject to the required regulatory approvals, the board intends to seek shareholder approval for the full proposal."

Telstra is negotiating with the government and NBN Company, the company charged with rolling out the federal government's $42 billion high-speed broadband network, on the implementation of the 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.

Telstra said earlier this month that it was concerned that draft laws that would govern how NBN Co operates and is regulated could create a retailer rather than a wholesale network provider.

The legislation states NBN Co is to be a wholesale-only company but it gives the communications minister significant powers to allow it to conduct retail services.

Telstra has said the draft legislation has raised the prospect of NBN Co becoming a government-funded retailer, not just a wholesale network provider.

Telstra has said 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.

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.

Telstra has said that if the draft laws came into force, Telstra would need to factor this into the financial consideration required to achieve an agreement that is in the company's and its shareholders interests.

Telstra shares were steady at $3.17 at 1028 AEDT on Friday.