Debate on legislation that paves the way for the break-up of Telstra has been delayed as the federal government attempts to salvage its national broadband network (NBN) strategy.
Communications Minister Stephen Conroy has been negotiating with the minor parties in an attempt to pass the legislation, which is crucial to rolling out the $43 billion network.
A vote had been expected to take place on Monday night but debate has now been put off until Tuesday.
Family First senator Steve Fielding, whose vote the government needs to get the bill passed, says the decision to delay the debate is a sign a deal is imminent.
The legislation would enable the government - which wants Telstra to sell some of its existing infrastructure to NBN Co, the company that will build and operate the network - to force Australia's biggest telco to separate its retail and wholesale arms.
"The fact the government has pulled the bill shows a deal is imminent, ending the uncertainty for shareholders," Senator Fielding said on Monday night.
"It's a shame the government has dragged shareholders though this mess to get to this point."
The opposition insists the government is holding a gun to Telstra's head by threatening to exclude it from bidding for lucrative next generation wireless spectrum unless it agrees to separate.
Former opposition communications spokesman Nick Minchin said the NBN would fail unless Telstra was involved in its rollout.
"This bill represents nothing more than Labor Party standover tactics against Telstra," Senator Minchin said.
"It desperately wants to force Telstra to prop up its $43 billion NBN, as without the company the project simply cannot be viable."
With the opposition ardently opposed to the legislation, and the Australian Greens and independent senator Nick Xenophon supportive of Telstra's break-up contingent on the government agreeing to amendments, Senator Fielding is crucial to the outcome of the vote.
Senator Fielding, who met with senior Telstra executives on Monday afternoon, is yet to come to a decision on which way he will vote and will hold further discussions with the government before making up his mind.
The Greens also have some issues with the legislation but believe Senator Conroy will agree to the majority of their amendments.
"We are still deadlocked on the issue of the eventual privatisation of the national broadband network, and are insisting the government show flexibility and commonsense," Greens broadband spokesman Scott Ludlam said.
He said they planned to move amendments aimed at providing greater consultation on payphone removal, disability access to payphones, and better protection for smaller players in telco markets.
"We believe we have government support for the majority of our amendments. The key stumbling block will be the privatisation clauses," he said.
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