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Telstra: a mess « Previous | |Next »
August 28, 2006

The Telstra privatisation is a mess despite all the talking up of its prospects around the T3 sale this morning:---- it is one of the world's top-rated telecoms; with its transformation it is going to be a great and growing world class company in two years time; and that we should trust Sol Trujillo to deliver higher revenue and greater profits etc etc. The Government is still left representing voters, being a regulator of the industry which needs increasing competition and finally, being an owner. Telstra remains a political problem. It's a quagmire.

Telstra is damaged goods. It is borrowing to maintain dividends at 28 cents a share and its share price is going to remain under pressure as it is faced with declining revenue, erosion of its margins and increased competition. So the share price still looks expensive, especially when the Future Fund starts selling its massive holding of $14.5 billion. Hence the sweetners to buy its stock to counter the negative outlook of the market based on the judgement that Telstra does not have sufficient high-growth business to offset declining revenues from its core copper telephone line business.

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Nicholson

Australia's communications are not competitive and it doesn't look like becoming so in terms of competition in infrastructure investment. We need more firms and that requires restructuring Telstra. That is not going to happen. Telsta will not be broken up with privatisation. So we are going to have a highly regulated industry for some time.

I 'm suprised by the ALP's response. It remains fixated on fighting privatisation tooth and nail, even though it's a lost battle. Why not concentrate on the future with a privatised Telstra, given its view that Australia will become a global communications backwater? At the moment they are backing Telstra in its regulatory fight with the Government. Isn't the ALP saying that the Howard Government has failed to address the national priority for investment in new broadband sevices? How should this be done, given that it is highgly unlikely that a future Labour government will buy back Telstra from shareholders

The current political and regulatory mess does result from the Howard Government's refusal to separate the retail and infrastructure arms of Telstra before selling the first tranche of the business in 2001. The ALP also backed away from that kind of separation. What we have now is operational separation: the company will be split into three operational divisions to control is basic network, sell wholesale service to competitors and sell retail services to customers. Each must keep offices separate from others and and employees from one division must not be able to to wander into the office of another. It's a joke.

| Posted by Gary Sauer-Thompson at 7:19 PM | | Comments (4)
Comments

Comments

Keep in mind that Telstra will realise in excess of $500B during the rest of this Century!

It should remain fully in public hands, to deliver good service at low cost to help Australian enterprise, and to provide much needed employment without the senseless need to provide dividends for shareholders.

Noel,
I think that we have lost that argument. Will it be bought back by a future ALP government? I doubt it.

Therefore we need to think about how to ensure we have good telecommunications that are delivered by private companies in a deregulated market.

Gary i dont agree with giving up, nothing is impossible to out back in place if you really wanted to.

It worked fine being in public hands last Century without any problems didnt it!

We may as well shut the door and turn off the lights the way we have been led by the Government

Noel,
I don't disagree with your analysis. My problem is that I cannot see a federal ALP delivering on this kind of rollback.

I'm not sure what their telecommunications policy is. They have given up on the structural separation of Telstra ---infrastructure and retail--which I thought was a good policy. I'm not sure where they stand now.

Have a look these Telstra blogs and this one by Rod Breum