TLS 0.73% $2.73 telstra corporation limited.

telstra is endangering its shareholders

  1. 581 Posts.
    The ACTU has recently issued a paper Shareholders risks associated with the NBN.

    In this report they argue that Telstra’s approach to the NBN represents serious risks to its shareholders.
    It says the incumbent’s attitude and the inflammatory statements often made by its management give the government the incentive to seriously consider any alternative bid. And, even if Telstra does win the bid, its uncompromising stand will see tougher rather weaker regulations attached to the awarding of the $4.7 billion contract.
    Even if the NBN were to be were to be scrapped entirely Telstra will most likely be faced with stronger regulations generally than would have been imposed if it had taken a more conciliatory position and worked with the government and the industry.
    The report makes no arguments as to right or wrong, but it does state that there is a widespread perception that Telstra is anti-competitive, that the current regulatory regime doesn’t work, and that there is no genuine equivalence. The fact that Telstra is so combative and litigious on these points only serves to reinforce that perception.
    To date none of Telstra’s negative behaviour has delivered any benefits to the company.
    It is arrogant in the extreme to habitually deny the concerns of others, be it the government, the consumers, the regulator or the industry. The report squarely places the blame for this on Telstra’s senior management.
    The NBN has high government priority and it is unlikely that they will be fazed by a short-term-fixated executive/board that might not even be there by the time the NBN is deployed, the report says.
    The report also mentioned the various reports and comments from financial analysts highlighting their concerns about the position Telstra has taken, and they also indicate that tough regulations could be very harmful to Telstra. The report stated that Telstra is putting no effort into reducing these regulatory risks, other than to issue threats to the government and the regulator. The incumbent has made no constructive attempts to find ways that would reduce these regulatory risks.
    The report also highlights that there are limited alternatives to a fibre-based NBN. The HFC and wireless networks have a role to play but these are not long-term alternatives to an IP-based national broadband network. Telstra claims that it can use them as alternative options but the report indicated that this was not the case.
    The report also states that it is not too late for Telstra to reclaim leadership and start working with the government, the regulator and the industry to look for a national solution. The financial crisis will only strengthen the government’s resolve to ensure that the NBN is rolled out, as it sees this as one of the cornerstones of its nation-building policy, which is earmarked as one of its most important strategies to guide Australia through the economic turmoil.
    In the end this negative environment is of Telstra’s own making and it is most likely that the shareholders will suffer because of it. This should never have happened. As the industry leader Telstra should never have allowed itself to get into such a difficult position.

    For the ACTU report see:

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