"The bottom line is: this is a better deal for the Australian taxpayer because we've struck a negotiated outcome with Telstra."
It's expected the announcement, made on Sunday when financial markets were closed, will prompt a rally in Telstra's share price when markets open on Monday.
Communications Minister Stephen Conroy said the agreement paved the way for Telstra to participate in the rollout of the network, and was likely to result in the telco becoming NBN Co's biggest customer.
"This will be delivering cheaper and faster services for all Australians," Senator Conroy said.
Sign up for Computerworld eNewsletters.