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Telstra warns split could cost $1.1bn
04 November 2009
If the Australian government forces Telstra into a functional separation, the change will cost the company $1.1 billion, it has warned
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[Telstra]
[Australia]
[functional separation]
[Thodey]
[Trujillo]
Comment: New CEO David Thodey came to the top job in Telstra with the challenge of mending a relationship with the government that has been difficult during the rule of his predecessor, Sol Trujillo. But the government has changed the agenda, by requiring a functional — or even actual — split in the company. Thodey’s task will be difficult.
Telstra has warned the Australian government that a proposed functional breakup of the broadband network could cost about $1.1 billion.
Telstra, led by new CEO David Thodey, is negotiating with the federal government based in Canberra to sell the fixed-line assets into a new $38 billion open-access, high-speed national broadband network being developed by the government at present.
The government is formulating legislation that will lead to Telstra either willingly breaking up its network assets from its retail operations, or facing tight regulation, including an obligatory “functional” separation of its businesses.
The proposed reforms are targeted at boosting competition in the fixed-line broadband sector. Telstra has decided to halt fixed income for all the members of its senior executive team for 2009-10, except where they have been elevated to a new position.
The telecom major is also planning to scrap the US $1.98 administration fee on bill payments made in the mail or over the counter, which it started to impose in September. GTB
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