TLS 0.00% $3.24 telstra corporation limited.

Top buy, page-11

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    I would add in there the following:

    HTA is majority controlled by Hutchison Whampoa.

    Locally TEL is in a 3G JV alliance with HTA, for Australia, and with HWL for NZ.

    Globally, HWL has 3G licences in each of the UK, Ireland, Italy, Denmark, Sweden, Austria, Italy, Hong Kong, and Australia. It is also currently poised to take a 3G licence in France and is poised for 3G in NZ. In each of Thailand, India and China, HWL is pursuing CDMA, along with HTA in Australia.

    According to Deutsche Bank (21/05/02), HWL will now use its large provisions /reserves accumulated in value over the last 2 -3 years to shield 3G start-up losses in Europe. This means that, going forward, HWL's profit forecasts will not be adversely impacted by the associated start-up costs of 3G.

    Regardless, therefore, of whether HC's believe in HTA or its prospects for success in relation to 3G, the facts remain:

    HWL (through HTA) will prove to be a very disruptive influence to the Australian telecommunications landscape, going forward.

    To be successful in global 3G, HWL does not require HTA to be a local success.

    Conversely, due to the global nature of HWL's 3G aspirations, HTA is largely shielded from much of the associated on-costs, etc associated with rolling out a 3G network.

    Telstra's success in mobiles will still be attacked by a resurgent Optus /SGT, an aggressive HTA, and a bailed up Vodafone. In other words, Telstra's competitive forces are continuing to line up against it here in Australia (particularly, in mobiles).

    Outside of Australia, Telstra is a relative minnow, compared variously to Vodafone, HWL, NTT DoCoMo, and any of the myriad of European and US telcos out there.

    Within Australia, Telstra's growth prospects will increasingly become either capped, or targetted for competition (by both the Government, and by its competitors). Outside of Australia, however, Telstra will struggle to gain any form of leveraged foothold to make a success of its overseas expansion.

    Going forward, Nickoo's views on the subject of Telstra's future price direction have more semblance to them than the prevailing contrary views that currently abound on HC.
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