Telstra sale in danger
10 April 2006
The Australian state's proposed A$24bn (£10bn) privatisation of incumbent carrier Telstra could be forced off the rails over a disagreement with the national regulator.
With Telstra's earnings taking a dive on the back of losses in the fixed line space, the carrier has warned that future investment in its multi-billion dollar next generation networks depend on favourable terms from the regulator.
However, it seems neither the national operator, nor the regulator can agree on a pricing structure for allowing rival service providers access to Telstra's infrastructure.
As part and parcel of the government's proposal to future-proof communications in the country, the Department of Communications last year announced a more robust regulatory framework to ensure reviews of the regional telecommunications services on a regular basis. This also included the introduction of operational separation at Telstra.
Under the new legislation, Telstra would be required to maintain separate retail, wholesale and network business units as a means to ensure that as the dominant carrier, it treats all other telecommunications companies fairly.
An announcement from the regulator is expected this week.
Nevertheless, as the spat continues, the possibility of the government's sale of its remaining 51.8 per cent stake in the company slips further away.
The company's share price has dipped to below, A$3.60, way under half the price that Telstra stock went for in 1999.
While the government will convene next month to decide on whether to go ahead with the offering in October or November, a report in the Financial Times suggests that Prime Minister John Howard, is considering stalling the deal until the share price picks up.
More likely, such a delay would remove the deal from the table for several years with federal elections on the agenda for next year.
To comment on any articles, please contact us at chatback@telecoms.com or have your say on our blog.
Bookmark this page
