Telstra battles shareholder revolt

Telstra has tried to dampen down shareholder calls for the board to resign over the company's underperforming share price

Telstra (ASX:TLS) has defended itself from a barrage of shareholder attacks on the continued underperformance of the telcos’ share price.

Read more on Telstra’s 2010 AGM,

Speaking at the company’s annual general meeting, chairman, Catherine Livingstone, argued claimed Telstra had made significant advances at addressing the issue.

“We are very ambitious for Telstra,” she said. “[In the last four years] we have had an increase in revenue in total in Telstra of $2 billion over the last four years. What is behind that… is actually a reduction of $1.5 billion because of the reduction in the PSTN and the reduction wholesale prices.

“So to make a $2 billion increase we actually had to make $3.5 billion. We increased our wireless revenue by $2 billion and increased our fixed broadband and our IP data by a further one. They are all new sources of revenue so we have been very ambitious to make sure that we find new sources of revenue to offset those parts of our business that are declining.”

Since August this year the company’s share price has declined from a high of $3.30 to under $2.60 today.

Livingstone also argued the case as to why the company’s board of directors should not stand down over its inability to turn the share price around.

“Your board is very concerned about the share price and believes the share price significantly undervalues Telstra and the value in your business,” she said.

“In terms of the actions we are taking… we are focusing very much on meeting our financial targets, and that includes quite a deal of restructuring in the business, taking out cost and finding new sources of revenue… and making sure we can deliver the best customer service we can…”

Uncertainty affecting Telstra’s future around the ongoing negotiations with the government and the NBN Co, also remained an issue, Livingstone said.

“That is clearly a huge factor in the uncertainty affecting the share price,” she said. “The selling by the Future Fund [of one per cent of its Telstra shares] is also an issue in terms of the share price.

“They have indicated that they are going to sell down to a lower level of holding. There is nothing we can do about that Future Fund strategy, but we can do something about our own strategy.”

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