Telstra has confirmed it has signed an $11 billion deal with the NBN Co to allow the new high-speed broadband network to use Telstra's existing network and infrastructure.

In a statement to the Australian Stock Exchange, Telstra said the agreement would be for 35 to 40 years and would see Telstra hand over all its broadband services to the NBN over the 10 years it would take for the new network to be completed.

Telstra will recommend to its shareholders that the deal be accepted.

Telstra and NBN Co have also agreed to product features and pricing for voice and data services, but these are yet to be released.

As part of the deal, Telstra has promised to spend $2 billion on upgrading infrastructure and migrating customers to the NBN.

Telstra's CEO, David Thodey, said the agreement ended the uncertainty surrounding Telstra's possible association with NBN Co and would allow his company to focus on customer service.

The agreement remains subject to approval by the Australian Consumer and Competition Commission as well as the shareholder approval which will go to a vote on October 18.

Telstra chairman Catherine Livingstone described the two-year negotiations as "complex", but said the decision to participate was made because Telstra could recover more value for the business "given the loss of value after NBN policy announcements".

The Government has signed off on the deal, which means the NBN will rent Telstra's underground network and start taking over its fixed-line phone customers.

NBN Co has also reached an $800 million deal with Optus, under which the telco will shut down its fibre optic network and transfer customers across to the NBN.

Announcing the agreement today, Prime Minister Julia Gillard sought to make political capital out of the deal, warning that Opposition Leader Tony Abbott has pledged to "destroy the NBN".

"Tony Abbott said to [communications spokesman] Malcolm Turnbull his job was to destroy the National Broadband Network," she said.

"I anticipate the Opposition will go to the next election saying they'll dig the cables out of the ground."

Mr Abbott would not confirm that he had told Mr Turnbull to destroy the network.

But he said Mr Turnbull had done a really good job in "exposing the waste and incompetence in the Government's National Broadband Network white elephant".

Finance Minister Penny Wong confirmed a break fee of $500 million should the NBN be cancelled.

Telstra CEO David Thodey confirmed the exit clause.

"As a company we are subject to the policies of the Government of the time and we need to have some optionallity," he said.

"They are commercial contracts, just like we'd sign a commercial contract with anyone. We have exit clauses and it's really no more difficult than that."

NBN CEO Mike Quigley hailed the deal, saying it took two years but it was "worth the wait".

"We will be using a substantial amount of NBN's facilities and in so doing we will be able to build the NBN more efficiently avoiding the wasted duplication of infrastructure that otherwise would have taken place," he said.

"We will be able to build the NBN at lower cost with less risk of delay, with less potential risk of disruption to communities, as we roll out the network."

Mr Thodey said the deal gives the company a chance to grow and "leave behind other things that may have constrained us in the past".

"Our board is confident that this agreement is the best alternative for Telstra and for our shareholders," he said.

'Too expensive'

But Coalition communications spokesman Malcolm Turnbull says it could be done more cheaply.

Mr Turnbull is critical of part of the deal that means Telstra and Optus will both agree not to use their pay TV cables to provide broadband services.

He said the NBN should use some of Telstra's copper phone lines to deliver the broadband more cheaply - but the deal makes no provision for that.

"What it is doing is wiping out any potential competition with the NBN," he said.

"Now these HFC cables, pay TV cables, pass well over 30 per cent of Australian households and they would be able to provide real competition with the NBN network and of course keep prices low."

Mr Turnbull said the deal was risky for taxpayers, who ultimately own the NBN.

"If it were decided, as it should be, to use a mix of technologies to deliver fast broadband to all Australians and to use a portion of the copper network, the Government will have to go and pay Telstra even more billions. Pay twice for the same copper network," he said.

Mr Turnbull said it would be too expensive for many of those who currently do not have internet access.

"It is poverty that is denying people access to the digital economy, not technology," he said.

"So you've got to have as a key priority making your access to broadband more affordable. The NBN, because they're wasting so many billions of dollars unnecessarily, will make it less affordable."