12/11/2009
Bloomberg News
Dec. 10 (Bloomberg) — Australia is planning to make a “significant” announcement this month on the progress of a government proposal to split Telstra Corp. from its fixed-line network, according to Communications Minister Stephen Conroy.
“We are confident that we will have very significant progress to announce by Christmas,” Conroy told reporters in Sydney today. “We are engaged in very constructive dialogue.”
Melbourne-based Telstra may be blocked from buying new airwaves to expand mobile services unless it separates its national copper-wire network. Phil Campbell, a telecommunications analyst at Citigroup Inc., said there’s a 50 percent chance the two sides will reach a non-binding agreement to sell assets to the government’s proposed A$43 billion ($39 billion) fiber network NBN Co. before Christmas.
“A compromise is more than likely,” Campbell said in a note to clients today. “Telstra’s involvement is important in lowering the NBN build cost,” wrote Campbell, who has a “hold” rating on the stock.
Telstra’s options include selling the network, keeping the assets or transferring them to NBN in return for an equity stake or cash.
Any agreement will take “a couple of years” to implement, Conroy said, without providing further details.
Telstra has Australia’s only national network and the company accounts about 75 percent of the country’s fixed-line voice and Internet data revenue. Rivals such as Singapore Telecommunications Ltd.’s Optus Pty must pay fees to tap into Telstra’s network to offer services.
“We will deliver the wholesale open access network that we have promised, and we will legislate,” Conroy said.
