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Sat, Sep 10, 2005 - Page 12 News List

Telstra criticizes government regulators


Australian government attempts to boost competition in the telecommunications industry as part of its push to privatize former state-run monopoly Telstra Corp will have the opposite effect, the company said yesterday.

"At a time when the rest of the world is winding back regulation with growing competition, Australia is increasing the scope and reach of regulators and expanding the power and political involvement in the regulatory process," Telstra's managing director of regulation Kate McKenzie told a Senate inquiry into the sell-off.

"We're concerned this is a step backwards which will dull competition, weaken Telstra and further reduce shareholder value," she said.

Canberra wants to sell its remaining 51.8 percent stake in Telstra late next year and Parliament is this week debating legislation underpinning the country's biggest ever privatization.

Part of the sell-off is a new raft of regulations to ensure Telstra does not abuse its dominant position in the market by pricing competitors out of the market.

A shadow was cast over the Telstra sale this week when the company, which last month announced a record A$4.4 billion (US$3.4 billion) annual profit, warned profit likely will decline next year and issued a statement informing the Australian Stock Exchange that it has put off spending about A$3 billion on infrastructure, IT systems and staff.

It also said that 14 percent of its phone lines have faults. The revelations shocked supporters of the sale within Australian Prime Minister John Howard's government, forcing them to reconsider their backing for the multibillion-dollar privatization.

Barnaby Joyce, a senator with junior governing coalition partner the Nationals, said yesterday he was reassessing his support for the plan in light of the information.

"It's a different deal, isn't it?" Joyce told Australian Broadcasting Corp radio. Joyce's vote is considered key for the Telstra sale bills to win passage through the Senate upper house, where Howard's government has a single-seat majority.

"We've got a lot more information that we need to consider and it's not a case that the sale is off ... it's a case the lights have gone from green to amber. We have to be a lot more careful," said Joyce, who has been one of the most outspoken critics in Howard's government of the Telstra sale.

The Nationals rely on support from rural voters who long have complained that Telstra does not provide them with adequate telephone and Internet connections and fear that if privatized the company will be even less inclined to improve rural services.

McKenzie sought in the senate to reassure rural voters that Telstra wants to abandon them.

"I would like to dispel one myth -- the suggestion that Telstra wants to water down regulations that support services to rural and regional Australia," she said. "It's not true and it never has been true."

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