Telstra to oppose separation

Telstra (ASX:TLS) has described a proposed bill to separate the telco's business operations as "unnecessary" in a submission to a Senate inquiry into the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009.

In a statement, Telstra restated its support of the National Broadband Network (NBN) plan but said the separation bill "would make it harder to achieve the Government's objectives for the NBN".

"I want to stress that while Telstra continues to support the Government's vision for the National Broadband Network (NBN), we believe that this Bill is unnecessary and makes it harder for the Government to achieve its objectives for the NBN," Telstra CEO David Thodey said in the statement.

"Telstra continues to negotiate with the Government in a positive and constructive manner on the NBN. The Telstra Board and management have consistently stated that we can only agree to proposals that represent fair value to shareholders, and which protect the interests of our employees and customers."

Thodey also claimed the proposed bill would destroy value for shareholders, reduce competition (especially in mobile and media markets), and "not necessarily result in industry reform".

In September the Federal Government announced it wanted Telstra to structurally separate and if the telco giant wouldn't do so voluntarily the Rudd administration will use regulation to achieve the goal.

At a press conference in Canberra, communications minister Stephen Conroy, said telecommunications legislation will allow the government to impose a strong functional separation framework on Telstra unless it separates of its own accord.

The legislation gives Telstra the opportunity to decide how it will structurally separate, and submit its own plans to the Australian Competition and Consumer Commission (ACCC).

"Telstra has no choice but to oppose the passage of the Bill in its current form," Thodey said.

"If the Government decides to proceed with the Bill, we believe that it is only sensible that the Senate delay debate until after the conclusion of constructive discussions between Telstra and the Government over the NBN and the completion of the Government's NBN Implementation Study. We would also urge that significant amendments are made to the Bill."

Telstra's full submission can be found here.

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