Application Form [pdf]

This document pretains to SCL-T/C-20061204-00013 for Transfer of Control on a Submarine Cable Landing filing.

IBFS_SCLTC2006120400013_539331

.' KELLEY DRYE & WARREN LLP A LIMITED. LIABILITY PARTNERSHIP 3050 K STREET, N.W. NEW YORK, NY SU ITE 400 FACSIMILE TYSONS CORNER, VA WASH I NGTON, D.C. 20007 (202) 342-8451 CHICAGO,IL ww.kelleydrye.com STAMFORD, CT (202) 342-8400 RANDALL W. SIFERS PARSIPPANY, NJ DIRECT LINE: (202) 342-8601 EMAIL: rSifers4!kelleydrye.com BRUSSELS, BELGIUM 'OtC \J A 1ß'ùf; AFFILIATE OFFICES tl. ~I \~~~~l~ MUMBAI, INDIA \ ttttr\~t;L~," December 4, 2006 DA STAMP & RETRN VIA COURIER Marlene H. Dortch, Secretar Federal Communications Commission International Bureau - Policy P.O. Box 358115 Pittsburgh, PA 15251-5115 Re: Application of Reach Global Networks Limited for Transfer of Control of Cable Landing License Dear Ms. Dortch: On behalf of Reach Global Networks Limited ("RGNL"), enclosed for fiing are an original and six (6) copies of an application for Commission approval to transfer control of Telstra Holdings (Bermuda) No. 1 Limited ("Telstra Bermuda"), an entity with 50% negative ownership control of Reach Ltd., the parent company ofRGNL, which may result ftom the sale and transfer of shares of Telstra Bermuda's ultimate parent company, Telstra Corporation limited. RGNL holds a cable landing license for the Japan-U.S. cable network (see File no. SCL-T/C/-20011220-00026). . Also enclosed is a completedFee Remittance Form 159, and a check in the amount of $965.00 payable to the Federal Communcations Commission, to cover the application filing fee. Please date-stamp the enclosed extra copy of this filing and return it to me in the envelope provided.

KELLEY DRYE & WARREN LLP' Marlene H. Dortch, Secretary December 4, 2006 Page Two If you have any questions regarding this fiing, please contact the undersigned. Very trly yours, Kelley Drye & Waren LLP ~~A+ Randall W. Sifers Counsel to Reach Global Networks Limited Enclosure

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DE (\ 4 ,006 READ INSTRUCTIONS CAREFULLY .JMÉltON Approved by OMB BEFORE PROCEEDING FEDERAL COMMUNICA nONS COMMISSION 3060-0589 REMITIANCE ADVICE Page 1_ 0,_ (I) LOCK BOX # ,j::lSii:: SECTION A-PAYER INORMATION Kellev Drve & Warren LLP $965.00~" as it appears on the card) (3) TOTAL AMOUNT PAID (U.S. Dollar and centsi.~ (2) PAYER NAME (if paying by credit card enter name exactly (4) STREET ADDRESS LINE NO. I 3050 K Street. NW (5) STREET ADDRESS LINE NO.2 Suite 400 (6) CIT (8) ZIP CODE Washini;ton 20007-5108 (9) DAYTIME TELEPHONE NUMBER (include area code) 202 342-8601 (II) PAYER (FRN) 0003-7201-58 IF MORE THA ONE APPLICANT, USE CONTINUATION SHEETS (FORM 159-C) COMPLETE SECTION BELOW FOR EACH SERVICE, IF MORE BOXES ARE NEEDED, USE CONTINUATION SHEET (13) APPLICANT NAME Reach Global Networks Limited (14) STREET ADDRES LINE NO.1 'Yo Kelley Drye & Warren LLt" (IS) STREET ADDRESS LINE NO.2 3050 K Street. NW. Suite 400 (16) CI (18) ZIP CODE Washini;ton 2UUU7 .5108 (19) DAYTIME TELEPHONE NUMBER (include area code) 202 342-8601 (21) APPLICANT(FRN 0015721913 (26A) FEE DUE FOR (PTC) (27A) TOTAL FEE $965.00 $965.00 (28A) FCC CODE I (29A) FCC CODE 2 (23B) CALL SIGN/OTHER ID (24B) PAYMENT TYPE CODE (26B) FEE DUE FOR (PTC) (27B) TOTAL FEE (28B)FCC CODE I (29B) FCC CODE 2 SECTION D CERTIFICATION CERTlFIÇA TION ST A T..ENT I, fl Q¡dg Ij IA/. .t, ".l/.( , certify under penalty ofpeijury that the foregoing and supporting infonnation is tre and correct to the best of my knowledge. infonnation and belief. l SIGNATURE ~ 11,~ DATE 12/0'1 h poi, i / SECTION E - CREDIT CARD PAYMNT INFORMATION MASTERCARD_ VlSA_ AMEX_ DlSCOVER_ ACCOUNT NUMBER EXPIRATION DATE I hereby authorize the FCC to charge my credit card for the service(s)/authorizatirn herein described. SIGNATURE DATE SEE PUBLIC BURDEN ON REVERSE FCC FORM 159 FEBRUARY 2003(REVISED)

Before the FEDERA COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Reach Global Networks Limited ) Licensee ) ) Commonwealth of Australia ) File No. SCL-T/C-2006 Transferor ) ) Telstra Corporation Limited ) Transferee ) ) ) Application for Transfer of Control of ) Cable Landing License ) APPLICATION FOR TRASFER OF CONTROL OF CABLE LANDING LICENSE - STREAMLINED PROCESSING REQUESTED Reach Global Networks Ltd. ("RGNL") (FRN: 0015721913), through its undersigned counsel and pursuant to an Act Relating to the Landing and Operation of Submarne Cables in the United States, 47 U.S.C. §§ 34-39 (1994), Executive Order No. 10530, Exec. Ord. No. 10530 reprinted as amended in 3 U.S.C. § 301, and Section 1.767 ofthe Rules of the Federal Communications Commssion ("Commission"), 47 C.F.R. § 1.767, hereby requests approva11 to consumate the transfer of control of Telstra Holdings (Bermuda) No.1 Limited ("Telstra Bermuda"), an entity with 50% negative ownership control of Reach Ltd. ("Reach"), the parent company ofRGNL, which may result from the sale and transfer of shares of Telstra Bermuda's Pursuant to Section 7.2 ofthe Agreement by and between Reach Ltd., Telstra Corporation Limited, and Pacific Century CyberWorks Limited, on the one hand, and the Federal Bureau of Investigation and the U.S. Departent of Justice, on the other, effective November 29,2001, Telstra and Reach hereby request that the Commission condition the grant of such approval on compliance with the terms of such Agreement.

ultimate parent company, Australian-based global carer Telstra Corporation Limited (ABN 33 051 775 556) ("Telstra"), as described below.2 RGNL holds a cable landing license for the Japan-U.S. cable network.3 As described more fully below, pursuant to a global offering, the Commonwealth of Australia (the "Commonwealth") has sold to retail and institutional investors in Australia and New Zealand, qualified institutional buyers in the United States and institutional investors in the rest ofthe world shares representing approximately 30% of Telstra's issued shares, or approximately 34% ifthe lead managers exercise their overallotment option on or before December 18, 2006, as expected (although there is no obligation upon the lead managers to exercise that option) (the "Offer,,).4 Upon closing ofthe Offer, the Commonwealth's holdings in Telstra decreased ftom 51.8% to approximately 22%, or approximately l7% ifthe overallotment 2 A separate application to transfer control of Reach as the holder of an international Section 214 authorization is being filed simultaneously with the submission of this Application. 3 See File No. SCL-T/C-20011220-00026 (granted 1/25/2003) (non-streamlined application to transfer ownership interest in Japan-U.S. Cable Network ftom Level 3 Communcations, Inc. to Reach Global Networks Limited). 4 Pursuant to the terms ofthe Offer, Telstra shares are payable in two instalments. Upon payment of the first instalment, a purchaser wil direct the transfer oftheir Telstra shares to be held on trst until the final instalment is paid, wil receive an instalment receipt for each Telstra share purchased and will be regarded as the beneficial owner of such Telstra share. Subject to a securty interest in favor ofthe Commonwealth securing the obligation of the purchaser to pay the final instalment, the Telstra shares wil be held in trst for the benefit ofthe instalment receipt holders. Separate and individual trsts wil be created for each Telstra share transferred in the Offer. While each of the trusts wil have the same trustee, no single beneficial owner or individual trust will hold 10% or more ofthe shares in Telstra. Each separate and individual trust will be kept distinct ftom each of the other trusts and there will be no pooling of any of the interests in shares held on trst. Upon payment of the final instalment in respect of a Telstra share transferred in the Offer, the trust will be dissolved and legal and beneficial ownership will reside with the purchaser. The final instalment must be paid no later than May 29, 2008. -2-

option is exercised, with the Commonwealth maintaining de facto control over Telstra, pursuant to certain provisions in the Telstra Corporation Act 1991, as amended (the "Telstra Act,,).5 As soon as practicable and, in any event, no later than February 24,2007 (subject to obtaining necessary regulatory approvals), the Commonwealth intends to transfer to the Futue Fund Board of Guardians (the "Futue Fund Board") all of its Telstra shares not transferred in the Offer. The Futue Fund is a Commonwealth investment fud set up to strengthen the Commonwealth's long-term finances by providing for its unfunded superanuation liabilities. The Futue Fund Board holds the Future Fund's assets for and on behalf of the Commonwealth. Upon closing ofthe share transfer, assuming exercise ofthe overallotment option, the Future Fund Board will hold an ownership interest in Telstra of approximately 17% for a mandatory two-year period ftom the date the instalment receipts representing Telstra shares transferred in the Offer are first listed on the Australian Stock Exchange, subject to limited exceptions. Post- close, the Futue Fund Board wil have rights and obligations like any other Telstra shareholder, and thus wil not have de facto control of T elstra. However, as described below, the Future Fund Board wil be required to hold the transferred Telstra shares for the two year escrow period. This transaction will not involve a transfer of operating authority, assets or customers. Imediately following the consumation of the aforementioned transaction, RGNL will continue to operate its cable assets consistent with its existing submarne cable landing license granted by the Commission. Attached hereto as Exhibit A are organization charts that 5 The Telstra Act is the Australian law that governs the formation and management of Telstra. In September 200S, the Commonwealth amended the Telstra Act by passing the Telstra (Transition to Full Private Ownership) Act 200S to enable the Commonwealth to undertake a sale of all or par of its stake in Telstra. Certain provisions ofthe Telstra Act providing the Commonwealth with oversight authority over Telstra will cease to apply when the Commonwealth's shareholding falls to lS% or less following the proposed transfer of shares not transferred in the Offer to the Future Fund Board. -3-

illustrate the current corporate strctue of the paries to the transaction and the strctue that will exist following consumation ofthe proposed transaction. RGNL respectfully requests streamlined, expedited processing ofthis Application pursuant to Sections 1.7670) and (k)(2) of the Commission's Rules, 47 C.F.R. §§ 1.7670) and (k)(2). This Application is eligible for streamlined processing pursuant to the Commission's Rules because following consummation ofthe transaction described herein, neither Telstra, RGNL, nor any affiliated entity wil be a foreign carer with market power in Japan, or affliated with a foreign carer with market power in Japan. Japan is the destination market served by the cable that is the subject ofthis Application. I. THE PARTIES TO THE TRANSACTION A. RGNL and Telstra RGNL is the owner of various cable and network assets in international waters and is a wholly-owned subsidiary of Reach. Reach, a joint venture between Telstra Bermuda and PCCW Limited ("PCCW"), is an international carer of combined voice, private line, and IP data services, serving markets in Asia and around the world, and focusing primarly on the provision of services at the wholesale leveL. Reach holds an international Section 214 authorization to provide international global facilities-based and global resale services between 6 the United States and all international points except Kiribati. Telstra is an Australian public corporation headquarered at 242 Exhibition Street, Melbourne, Victoria 3000, Australia. Telstra is Australia's leading telecommunications and information services company. Telstra offers a full range of integrated telecommuncations services and competes in all telecommunications markets throughout Australia, providing service 6 See International Authorizations Granted, Public Notice, DA 01-2833 (released Dec. 6, 2001) ("Reach 214"); FCC File No. ITC-214-20001228-00771. - 4-

to more than 9.9 milion Australian fixed lines and more than 8.4 million wireless cellular telephony subscribers. Telstra's primar activities include the provision of basic access services to most homes and businesses in Australia; local, long distance and international service to and ftom Australia; wireless cellular telecommunications services; broadband access and content; a comprehensive range of data and Internet services; management of business customers' IT and telecommunications services; wholesale services to other carers and ISPs; and cable television distrbution services. Prior to the Offer, the Commonwealth held a majority (51.8%) of the shares in Telstra, and thus, an indirect negative controlling interest in RGNL. No other entity held 10% or more ofthe shares in Telstra. B. The Future Fund The Futue Fund is a Commonwealth investment fud that was established under the Future Fund Act 2006 to strengthen the Commonwealth's long-term finances by providing for its unfuded superanuation liabilities. The Future Fund Board is a separate legal entity :£om the Commonwealth, is responsible for investment decisions of the Future Fund, and holds the Future Fund's assets for and on behalf ofthe Commonwealth. The Future Fund Board must seek to maximize retus on investments in the Future Fund, subject to complying with the Futue Fund Board's obligations under the Future Fund Act 2006 and any direction ftom the Commonwealth itself All members of the Future Fund Board are held to similar standards of care and duties as those of company directors under Australian law. The Future Fund Act 2006 allows the Commonwealth to transfer Commonwealth-owned assets, such as the Commonwealth's interest in Telstra, to the Future Fund Board. II. DESCRIPTION OF THE TRANSACTION -5-

A. The Commonwealth's interests in Telstra Prior to the Offer, the Commonwealth was Telstra's majority shareholder with a 51.8% ownership interest. As a result of the Commonwealth's shareholding (both prior to the Offer and following the Offer but prior to the transfer of shares not transferred in the Offer to the Futue Fund) and certain provisions of the Telstra Act, Telstra owes certain obligations to the Commonwealth that it does not owe to other shareholders and the Commonwealth has certain rights vis-à-vis Telstra that are not held by other shareholders. Among other things, Telstra is required to provide the Commonwealth with certain information that it would not generally be required to disclose to other shareholders. The Telstra Act also requires Telstra to keep the Communications Minister and the Finance Minister generally informed about Telstra's operations and to give them information about Telstra's operations as they require. The Communcations Minister has the power under Section 9 ofthe Telstra Act to give Telstra wrtten directions as appear to the Communcations Minister to be necessary in the public interest. Telstra also is required to notify the Finance Minister if Telstra intends to issue securties or financial products or otherwise engage in conduct that is likely to result in a dilution of the Commonwealth's equity in Telstra. The Finance Minister may direct Telstra not to engage in such conduct. B. The Offer Pursuant to the terms ofthe Offer, the Commonwealth has sold to retail and institutional investors in Australia and New Zealand, qualified institutional buyers in the United States and institutional investors in the rest of the world, shares representing approximately 30% ofTelstra's issued shares, or approximately 34% if the overallotment option is exercised. Upon completion ofthe Offer on November 24,2006, the Commonwealth's holdings in Telstra decreased from 51.8% to approximately 22%, or approximately 17% if the lead managers -6-

exercise their overallotment option on or before December 18, 2006, as expected (although there is no obligation upon the lead managers to exercise that option).7 While the Commonwealth has lost de jure control, it maintains de facto control over Telstra, as the unque rights and obligations discussed above remain in place. Such change in control constitutes a pro forma transfer under Section 1.767(g)(7) ofthe Commission's Rules. However, because RGNL's cable landing license has not been modified to exempt pro forma transfers of control ftom the prior approval requirement in Section 1.767(g)(6) of the Commission's Rules,8 RGNL respectfully requests that the Commission approve nunc pro tunc this pro forma transfer of control.9 7 The actual percentage ofTelstra shares held by the Commonwealth after completion of the Offer may vary depending upon the exercise of certain share allocation options by the lead managers, but wil not exceed 22%. 8 See Review of Commission Consideration of Applications Under the Cable Landing License Act, Report and Order, 16 FCC Rcd. 22167 (2001) at ir 63. 9 RGNL submits that is it unclear whether the closing ofthe Offer on November 24, 2006, which resulted in an insubstantial transfer of control (i. e., a pro forma transfer) ftom the Commonwealth (de jure control) to the Commonwealth (de facto control), was subject to the condition in the Japan-US cable landing license regarding Commission prior approval of the transfer, assignent or disposition of the license to "any persons". Since the Commonwealth controlled Telstra prior to the Offer closing and continues to control Telstra post closing (and thus, has always retained negative control ofRGNL as well), RGNL believes that the pro forma transfer did not implicate the condition to the license. Nevertheless, out of an abundance of caution, RGNL respectfully requests that the Commission grant approval nunc pro tunc, to the extent it may be required, ofthis pro forma transfer of control. RGNL's failure to raise this issue previously with the Commission was due to an inadvertent oversight. RGNL did not confirm until the day before the consumation of the closing ofthe Offer that its cable landing license had not been modified to remove the condition or conform it to the curent rules applicable to pro forma transfers of control. See Review of Commission Consideration of Applications under the Cable Landing License Act, 16 FCC Rcd. 22167 irir 62-63 (2001) (inviting existing licensees to seek deletion oftheir cable landing license conditions and adopting Section 1.767(g)(7) which permits pro forma transfers of control without prior Commission approval). Given the identity of the transferor and transferee in the instant case, RGNL submits that the pro forma transfer of control resulting ftom the Offer raises no public interest issue. RGNL notes that grant of the requested approval nunc pro tunc is consistent with the Commission's action in similar cases. See, e.g., Application of Williams Communications, LLC in File No. SCL-T/C-20020926-00080, DA 02-3248, Nov. 25,2002 (approval of pro forma transfer of control of entity holding cable landing - 7-

c. Transfer of shares to the Future Fund Board The Commonwealth will transfer its interest in Telstra of approximately 22%, or approximately 17% if the overallotment option is exercised, including any residual shares ftom the Offer, to the Futue Fund Board. The transfer to the Future Fund Board wil occur in at least two stages, with the intention that the transfer of the bulk of the shares to be transferred to the Futue Fund Board will take place no later than Februar 24,2007. Thus, after this transfer, the Futue Fund Board will hold an ownership interest in Telstra of approximately 22%, or approximately 17% ifthe overallotment option is exercised. It is not anticipated that there wil be any entity other than the Futue Fund Board that holds 10% or more ofthe shares in Telstra 10 following the transfer of shares to the Futue Fund Board. D. Impact of transfer of shares to the Future Fund Board on control of Telstra Control by the Commonwealth. The Australian Governent has stated an intention that the Futue Fund Board wil manage the Futue Fund's Telstra shareholding at ar's lengt fÌom the Governent and, after an escrow period of two years ftom the date the instalment receipts representing Telstra shares transferred in the Offer are first listed on the license nunc pro tunc); Transfer of Control of International Exchange Networks, Ltd., 15 FCC Rcd. 24924 (2000) (approval of pro forma transfer of control of entity holding cable landing license nunc pro tunc); Wiliams Communications, Inc., 15 FCC Rcd. 19610 (2000) (approval of pro forma transfer of control of entity holding cable landing license and pro forma assignent of cable landing license nunc pro tunc). 10 As noted previously, prior to payment of the final instalment, the Telstra shares transferred pursuant to the Offer will be held in separate and individual trsts for the benefit ofthe beneficial owners. While each ofthe trsts wil have the same trstee, no single beneficial owner or individual trust will hold 10% or more ofthe shares in Telstra. -8-

Australian Stock Exchange (subject to limited exceptions),11 will be required to sell down the shares over time and reinvest the proceeds. In accordance with this policy, the Australian Governent has stated that it does not intend to issue directions specific to Telstra shares held by the Futue Fund Board, other than the escrow direction and changes to the general investment mandate issued by the Commonwealth. However, a futue Governent may take a different approach. The Telstra shares transferred to the Futue Fund Board following completion of the Offer wil not be considered to be owned by the Commonwealth for certain puroses under Australian legislation. Certain provisions in the Telstra Act and other Commonwealth legislation will cease to have effect or apply to Telstra once the Commonwealth transfers its shares in Telstra to the Future Fund Board. The main consequences of this transfer are: · Telstra wil no longer be subject to certain obligations to provide financial and other information to the Commonwealth; · Telstra wil no longer be subject to the Communications Minister's power to direct Telstra as appears to the Communcations Minister to be necessar, in the public interest; and 11 The Futue Fund Board must hold the Telstra shares for the two-year escrow period except: · in order to satisfy demand ftom eligible Telstra shareholders under a Telstra initiated dividend reinvestment plan (if any); · as par of a Telstra capital management initiative (if any), such as a buy-back or capital reduction; or · to a single investor, provided that: · the disposal involves more than 3% ofTelstra's issued ordinar shares at the time of the disposal; · the disposal does not take place until at least six months after the date instalment receipts representing Telstra shares transferred in the Offer are first listed on the Australian Stock Exchange; · the investor provides an acceptable undertaking for at least the balance of the escrow period; · the price per share is no less than the institutional offer price; and · Telstra is advised prior to such disposaL.

· Telstra will no longer be subject to the Finance Minister's power to direct Telstra not to dilute the Commonwealth's equity in Telstra or to issue securities or financial products. Thus, once the Commonwealth transfers its shares to the Futue Fund Board, the Commonwealth will no longer have such special statutory powers vis-à-vis Telstra. Control by the Future Fund Board. Whle the Futue Fund Board wil be the largest individual shareholder of Telstra with a stake of approximately 22%, or approximately 17% assuming exercise of the overallotment option, the Futue Fund Board will not have de facto control ofTelstra. In examining whether a minority shareholder has de facto control of a licensee, "(a)lthough the percentage of voting stock held bya minority shareholder is relevant, the FCC also has considered as important factors the right to elect members of the company's board of directors, to determine the maner of operation, to make strategic decisions, and to control personnel and financing decisions.,,12 The Futue Fund Board will not have the ability to dominate Telstra's affairs. None ofthe special statutory rights possessed by the Commonwealth with respect to the control of Telstra wil be conveyed to the Future Fund Board. No special voting rights will be associated with the Future Fund's Telstra shares. The Future Fund Board wil not have the power on its own to designate any of the directors or officers ofTelstra, or otherwise to dominate the Board of Directors, control the operations of the company, or control hiring or finances. Assuming the overallotment option is exercised, more than 80% of Telstra shares wil be publicly traded shares 12 GTE Corp., 155 FCC Rcd. 14032, 14076 (2000); see also McCaw Cellular Communications, Inc., 4 FCC Rcd. 3784, at ~ 34 (1989) ("A minority shareholder will not be viewed as in control of a company unless its influence is so great that it is able to determine the licensee's policies and method of operation or dominate corporate affairs."); Wiliam S. Paley, 1 FCC Red. at 1025, 1025-26 (1986). - 10-

held by a varety of investors, none of whom is expected to hold more than 10% ofthe outstanding shares. Moreover, as the manager of an investment fund charged with "maximizing the retu eared on the Fund over the long term, consistent with international best practice for institutional investment," Futue Fund Act 2006, § i 8, the Futue Fund Board can be expected to act as a normal institutional investor, and not to seek to influence the day-to-day operations of Telstra. As discussed above, after the required two-year holding period, the Futue Fund Board wil be seeking to sell down its stake in Telstra in order to maximize returs ftom its holdings. Thus, far from exerting de facto control ofTelstra, the Future Fund Board wil be just one of many financial investors in Telstra, none of which wil individually possess the necessar voting power to control the company. III. PUBLIC INTEREST STATEMENT The proposed transaction wil serve the public interest. The Commonwealth of Australia has exercised its sovereign authority to determine that its continued paricipation as the controlling investor in Telstra is no longer consistent with its objectives. The public offering of the Commonwealth's shares enables RGNL to continue to operate its cable assets, to the ultimate benefit of U.S. consumers. As designed, the proposed transaction will be completely transparent to all consumers. Post-close, RGNL wil continue to operate under the same name and operating authorities as at present. The transaction entails no immediate change to RGNL's operation of its cable assets; any future change will be made in accordance with all applicable Commission requirements. RGNL will continue to have the same management in place overseeing its day-to- day operations and continue to be backed by the same financial qualifications. The only change will be in the ownership of the ultimate parent company of one of the entities that jointly own - 11 -

RGNL's parent company, Reach. The proposed transaction will not have a negative impact on competition because no competitors will be eliminated as a result of the transaction. Furher, it bears emphasis that the Commonwealth's decision to reduce its ownership interest in Telstra is consistent with U.S. Governent policy. Indeed, the U.S. Governent sought and received ftom the Australian governent an express statement of its commitment to the sell-down of Telstra in a side-letter to the Free Trade Agreement that was negotiated between the two countries.13 Moreover, earlier this year, the Office ofthe United States Trade Representative stated in its Anual Report to Congress under Section 1377 of the Omnibus Trade and Competitiveness Act of 1998 that the United States "strongly supports" the legislation in Australia authorizing the Commonwealth to sell all or par of its remaining stake in Telstra.14 That statement reflects the consistent position ofthe U.S. Governent for many years that liberalization in the telecommunications sector is promoted by' actions designed to promote private sector rather than public sector ownership of incumbent carrers. Hence, the Commission's expeditious grant of this Application would promote the U.S. public interest as ariculated by the relevant U.S. Governent agencies. 13 See Letter dated May 18, 2004, ftom Australian Minister for Trade, Mark Vaile to USTR, Robert Zoellick, available at: ww.ustr.gov/assets/Trade_Agreements/Bilateral/ Australia _FT Afinal _ Text/asset_upload _ file688 _3904.pdf 14 See United States Trade Representative, Results of the 2006 Section 1377 Review of Telecommunications Trade Agreements at 9, available at: ww.ustr.gov/assets/ Trade _ Sectors/Telecom-E-commerce/Section _1377/asset_ uploda _file43 _9276.pdf. - 12 -

iv. INFORMTION REQUIRED BY SECTION 1.767 OF THE COMMISSION'S RULES In support of this Application, RGNL submits the following information pursuant to Section 1.767 of the Commission's Rules, 47 c.P.R. § 1.767: (a)(1) Name, address and telephone number ofthe parties to the transaction: Licensee: Reach Global Networks Limited Clarendon House 2 Church Street Hamilton HMll Bermuda Telephone: +1 441 278 7960 Transferor: Commonwealth of Australia Deparent of Finance and Administration John Gorton Building King Edward Terrace Parkes, ACT 2600 Australia Telephone: 011 61 262152222 Transferee: Telstra Corporation Limited (ABN 33051 775556) Level 41 242 Exhibition Street Melboure VIC 3000 Australia Telephone: 011 6129396 1193 (a)(2) Place of Formation: Bermuda. Telstra is a RGNL is a corporation organized under the laws of corporation organized under the laws of Australia. The Commonwealth of Australia is a sovereign nation, established in 1901, that operates as a federal parliamentary democracy. - 13 -

(a)(3) Correspondence concerning this Application should be sent to: For Reach Global For the Commonwealth For Telstra Networks Ltd. c/o Reach Ltd. Nick Tomlinson Richard A. Hindman Amy Rosen General Counsel and Skadden, Ars, Slate, General Counsel Director of Corporate Meagher & Flom LLP Telstra Incorporated Development 1440 New York Avenue, 40 Wall Street Reach Ltd., 20th Floor NW 40th Floor Telecom House Washington, D.C. 20005- New York, New York 3 Gloucester Road 2111 10005 Wan Chai Tel: (202) 371-7552 Tel: (212) 863-2811 Hong Kong Fax: (202) 393-5760 TeL.: 011 85229833665 rhindman(qskadden.com With copies to: Robert J. Aamoth With copies to: Counsel to the Joan M. Griffin Robert J. Aamoth Commonwealth Randall W. Sifers Joan M. Griffn Kelley Drye & Waren LLP Randall Sifers 3050 K Street, N.W. Kelley Drye & Waren Suite 400 LLP Washington, DC 20007 3050 K Street, N,W. Tel: (202) 342-8620 Suite 400 Fax: (202) 342-8451 Washington, DC 20007 raamoth~kelleydre.com Tel: (202) 342-8620 Fax: (202) 342-8451 Counsel to Telstra raamoth~kelleydrye.com Counsel to Reach (4)-(7) Not Applicable. (8) Certifcation and Ownership Information Required by Sections 63.18(h)-(k) and (0) ofthe Commission's Rules, 47 C.F.R. §§ 63.18(h)-(k), (0): Section 63.18(h) - Transferee Information: the transaction described in this Application, the Following consumation of Future Fund Board will hold for a mandatory two-year period an ownership interest in Telstra of approximately 22%, or approximately 17% if the overallotment option is exercised. The Futue Fund is a Commonwealth investment fud organized under the laws of Australia. The Future Fund Board manages and administers the Future Fund. The Future Fund Board is a separate legal entity from the Commonwealth, is responsible for investment decisions of the Future Fund, and holds the Futue Fund's assets for and on behalf of the Commonwealth. The principal business of the Future Fund and the Future Fund Board is to acquire and grow financial assets in - 14 -

order to offset the Commonwealth's unded superanuation liability. The address of the Futue Fund and the Future Fund Board is Locked Bag 20010, Melbourne Victoria 3001, Australia. Post-close, it is not expected that any entity other than the Futue Fund Board wil hold 10% or more ofTelstra's equity. Telstra will not have any interlocking directors with a foreign carer post-close. 63.18(i) -- Certifcation Regarding Foreign Carrier Status and Foreign Affiliation: As evidenced by the signatue of its authorized representative to this Application, Telstra certifies that it is a carer in Australia and is affiliated through its ownership interest in Telstra with foreign carers in Australia, Bangladesh, Hong Kong, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, and the United Kingdom. 63.180) -- Certifcation Regarding Destination Markets: Not applicable; Telstra does not seek to provide international telecommunications services in the U.S. 63.18(k) -- Demonstration Regarding WTO Status, Market Power, and the Effective Competitive Opportunities Test: Not applicable; Telstra does not seek to provide international telecommunications services in the U.S. 63.18(0) -- Certifcation Regarding the Anti-Drug Abuse Act of 1988: As evidenced by the signature of its authorized representative to this Application, Telstra certifies, pursuant to Sections 1.2001 through 1.2003 of the Commission's Rules, that it is not subject to a denial of Federal benefits pursuant to Section 5301 ofthe Anti-Drug Abuse Act of 1988. (9) Certifcation of Compliance: As evidenced by the signature of its authorized representative to this Application, Telstra certifies that it accepts and will abide by the routine conditions set forth in Section 1.767(g) of the Commission's Rules, 47 C.F.R. § 1.767(g). (10) Additional information: Not applicable. (11) Information Required of Transfer of Control Applicants RGNL's ownership percentage and voting interest in the Japan-U.S. Cable Network are each 13.849206 percent. There wil be no changes to RGNL's financial or managerial qualifications as a result of the proposed transaction. - 15 -

V. REQUESTS FOR STREAMLINED PROCESSING RGNL requests streamlined processing of this Application pursuant to Section 1.767(j) and (k)(2) of the Commssion's Rules, 47 c.P.R. §§ 1.767(j) and (k)(2). Telstra and RGNL are affiliated with three (3) foreign carers - Reach Services K.K., Reach Networks K.K., Telstra Japan (Retail) K.K. - in Japan, the destination market served by the cable that is the subject of this Application. Nonetheless, by the signature of its authorized representative to this Application, RGNL certifies that this Application is eligible for streamlined processing because the subject foreign carer affiiates each lack a 50 percent market share in the international transport and local access markets in Japan and thus lack market power in the destination market. - 16 -

\: 'Y. VI. CONCLUSION B(l$~d on the fOi-egojìtg,RtjNL respeëtful1y submits thâtth~pii¡j)ícinteFest, cdnVenien:ce, andnecessÍty wòuld;be :fhere9. j)y the grant of this Applicadon. . Robert if. Aär.roID Nick Tom1ln.&n Joan M,ýrltt1l (jeuer~l Counsel and; Qire;ç.torof(Jo:rporate Rad--llW; &ifers Dè'vëlQt"mellt K.eeleyDr~e8l \¥arren LLF --each Ltd,. 2ptl Flk"qr 3050K Strøet, J,xW Tec1:eom House $uite: 4ØØ 3 G1Quccsicr Rna:d Wáshiij~toni: DC 20007 Wart Ohm (2(;2)34:4;;$400 HöngKong 1'é1.: on 852 2'983 3665 Cø.u'fsettt;dJ1XJNL ~ :~ "A-". ~..ls,ttll CÓtpòrâ'tjQiiLLim,réå (MMN 33OS1 71$$l(( RôbeÎ'.J;.:Äâmõth .Â;tíy.RiQsen .To1tM.~Jt~~ Genèr~. Cøun&el R~ndaÎ1WW.Sâfers TeI$ra . Inêöt:titá;;ed. Keiit:~'P~\j~WarynLLP ... 4ÖWá118treet 3050KS~ëet.NW, SI..dle 400 40tb Floor Wâshingtø;r. DC 20007 NewYotk; NY rOÓDS (202) 342-840Ø (21..)81S3~2811 COl.tt.~elt()'1'elstta Dl;t~d:. P~()t;1)1J:~r i,40Q6 - 17 - DCOI tEDM0A/5S06'1.12

12/02/2005 20: 34 9739211549 LORIGOLDSTEIN PAGE 02/03 VI CONCLUSION Based on the foregoing. RGNL respeclly submits that the public interest convenience, and necssity would be fuered by the grant of this Application. Repecful1y submitted, Reach Global NetwoJ'ks Ljnijted Robert J. Aamoth Nîck Tomlinson Joan M. Grn General' Counsel and Director of Corporate Randal W. Sifers Development KelleyDrye & WarenLLP Reach Ltd., 20th Floor 3050 K Street NW Telecom House Suite 400 3 Gloucester Road Washigton, DC 20007 Wan Cha (202) 342-8400 Hong Kong Tel. 011 8522983 3665 Couel to RGNL "" Rober J. Aaoth yR en Joan M. Gr . eni1 COunsel Radal W. Sifers Telstr Incorporated Kel1ey Dre & Warren LLP 40 Wan Street 3050 K Street NW, Suite 400 40th Floor Washigton, DC 20007 New York, NY 10005 (202) 342-8400 (212) 863-2811 C01el to Telsta l) Dated: Noember 1: 2006 "17 " DCOlIE0AJSS069.12 Ci

EXHIBIT A

Pre-Transaction Ownership Structure Commonwealth Other of Australia Shareholders i 51.8% 48.2% Telstra Corporation Limited (Australia) 100% Telstra Holdings Pty Limited (Australia) 100% Telstra Holdings (Bermuda) No! Limited PCCW (Bermuda) (Hong Kong) 50% 50% I I Reach Ltd. (Bermuda) I 100% Reach Global Networks Limited (Bermuda) 1. No entity other than the Commonwealth of Australia held 10% or more of the equity of Telstra Corporation Limited.

Post-Offer Ownership Structure (on November 24, 2006) Commonwealth Other of Australia 1 Shareholders2 17% 83% Telstra Corporation Limited (Australia) 100% Telstra Holdings Pty Limited (Australia) 100% Telstra Holdings (Bermuda) No! Limited PCCW (Bermuda) (Hong Kong) 50% 50% II Reach Ltd. (Bermuda) I 100% Reach Global Networks Limited (Bermuda) 1. The percentages shown for the Commonwealth and other shareholders are approximate and assume exercise of the overallotment option, The actual percentage of Telstra shares held by the Commonwealth after completion of the Offer may vary depending upon whether the lead managers exercise the overallotment option, but wil not exceed 22%, 2, No entity other than the Commonwealth of Australia is expected to hold 10% or more of the equity of Telstra Corporation Limited,

Post- Transfer Ownership Structure (no later than February 24,2007) Future Fd Bd Other i (Australia) Shareholders2 17% 83% Telstra Corporation Limited (Australia) 100% Telstra Holdings Pty Limited (Australia) 100% Telstra Holdings (Bermuda) Nol Limited PCCW (Hong Kong) (Bermuda) 50% 50% I I Reach Ltd. (Bermuda) 1100% Reach Global Networks Limited (Bermuda) I, The percentages shown for the Future Fund Board and other shareholders are approximate and assume exercise of the the overallotment option. The actual percentage ofTelstra shares held by the Future Fund Board afer completion of Offer may vary depending upon whether the lead managers exercise the overallotment option, but wil not exceed 22%, 2. No entity other than the Future Fund Board is expected to hold i 0% or more of the shares in Telstra Corporation Limited following the transfer of shares to the Future Fund Board,

04/12 2006 16:49 FAX 61 2 6215 2140 ~ 022/022 CERTIICATION I hereby certify that (a) the transfer of control of Tei~tra Holding; (Bermuda) No, 1 Limited, an entity with negative control of Reach Ltd., the parent company of Reach Global Networks Ltd., that wil result from the share transfer as described in the instant application wil not be transferred until the cunsent of the Federal Communications Commission has been given; and (b) all statements made in this application, exhibits and attachments that are a par of this application, as they pertain to the Commonwealth, as trasferor, are true, complete, correct, and made in good faith. By; mon Lè tS Deputy Secfetary General Manager Telstta 3 Sale Taskforce Department of Finance and Administration John Gorton Building Kig Edward Terrace Parkes, ACC 2600 Australia 01 i 61 262152222 ~ Date: ~ember /., 2006 DC01/EDM0A!501i? 12


Document Created: 2006-12-13 16:13:42
Document Modified: 2006-12-13 16:13:42
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