Australia announces surprise break-up of dominant Telstra


Wed, Sep 16, 2009 - Page 10

Australia yesterday announced shock plans to break up dominant telecommunications player Telstra to boost competition as it presses ahead with a US$37 billion national broadband network.

Australian Communications Minister Stephen Conroy said Telstra, part-owned by the government and subject to strict regulation, would effectively be forced to split its retail and network arms unless it agrees to do so.

“It is the government’s clear desire for Telstra to structurally separate, on a voluntary and cooperative basis,” Conroy said.

“The government will require the functional separation of Telstra, unless it decides to voluntarily structurally separate,” he said.

Under draft regulatory reforms, Telstra will be barred from acquiring further wireless spectrum unless it restructures and sells off its cable infrastructure network and stake in Foxtel pay TV.

But it may be allowed to keep the assets if it comes up with an alternative structural change acceptable to the government, Infrastructure Minister Anthony Albanese told parliament.

Telstra said it was disappointed at the move but was still committed to working with the government, which is planning a high-speed Internet network spanning the vast country.

“While we are disappointed the government has felt it necessary to introduce this legislation, Telstra remains committed to working with the government to find a solution that is in the best interests of the industry, the nation, Telstra and our shareholders,” chief executive David Thodey said.

Australia hopes to end the historic advantage Telstra has enjoyed over rivals because of its ownership of the country’s ageing copper communication lines.

The government also hopes to reduce Telstra’s influence over the telecommunications industry as it works towards the national high-speed fibre-optic network.