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brw daily ...

  1. rembrandt

    5,788 posts.
    Hmmm... BRW Daily.


    Dial S for stealth
    By Adele Ferguson
    Thursday, December 19, 2002

    The Howard Government has stepped up its political campaign to split Telstra by stealth. The first stage came seven months ago, when the Government unveiled a controversial plan to force a virtual separation of Telstra's $30 billion copper wire network by demanding the company separate the accounting of its wholesale and retail divisions. Now the campaign has entered stage two, with the surprise decision by the federal Communications and Technology Minister, Richard Alston, to order an inquiry into splitting the company and selling its services business.

    Late in November, the Government announced it would postpone the privatisation of the company until 2004-05 due to a hostile Senate and a poor share price. The new inquiry has been announced to pre-empt a discussion paper by the Australian Labor Party's communications spokesman, Lindsay Tanner, which will be released early in 2003. The report is expected to recommend selling parts of Telstra marks the beginning of Telstra's answer to the structural separation process. .

    Telstra executives have long debated the pros and cons of owning the network. Although chief executive Ziggy Switkowski and chairman Bob Mansfield publicly condemn splitting the company, BRW revealed in May this year that Telstra, two years ago, commissioned a report on the effect of spinning off the network (BRW, May 2).

    Another option was to create a new company that would be financed by Macquarie Bank going to the markets to raise debt and equity, similar to what it does with its infrastructure funds in areas such as airports and toll roads. The size of the new company would be determined by the type and number of Telstra network assets placed in it.

    The result would be two companies: a network company, housing the infrastructure, which could be part-owned by the Government; and a services company, which would consist of Telstra's voice, data, internet and broadband services and would have no government ownership.

    In addition to facilitating the privatisation of Telstra by stealth, splitting the company would help create a level playing field in the telecommunications industry. Although the industry was deregulated in 1997, Telstra is still the dominant company, capturing more than 80% of the local call market, more than 70% of the long distance market, 50% of the international market, and more than 45% of the mobile market. In 2001-02, Telstra accounted for more than 90% of the total profit of the telecommunications sector. Not surprisingly, its competitors have welcomed the new inquiry.

    *************************************************************


    eeeek, Mac going to the market to raise debt and equity similiar to airport and toll roads ... go wash your mouth out Adele ...

    This is only my view ... read the red stuff.

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