BT exec offers privatization advice to Telstra
- 22 June, 2006 09:13
Even as the Australian government tries to talk up the potential share price in its looming Telstra share sale, a regional telecommunications executive has warned that turning around the stagnating telecommunications giant will require a lot more than grudging concessions.
President of BT's Asia-Pacific region, Allen Ma knows well the problems plaguing Telstra as it treads the privatization path, because his company, the former British Telecom has already been there, more than a decade ago.
The difference, Ma says, is that BT recognized the opportunities available through a commitment to open up access to its network.
This commitment was underscored by efforts such as the January establishment of independent body OpenReach, which offers competitors access to the one-time monopoly network on favourable terms.
"Infrastructure is a basic system for the country, and you don't want to replicate it so you have wastage," Ma said.
"Of course we want to make sure BT Retail is successful, but [uultimately] the more retailers using your infrastructure, the better the return on investment for your shareholders," he said.
BT is focused on entering new markets such as the differentiated data services portfolio it is developing under the Application Assured Infrastructure label.
Such clean-slate approaches run contrary to Telstra's notoriously insular and protectionist views, Ma said.
Despite a buoyant ASX overall, Telstra's share price is down from the $7.50 range during the T1 offer to little more than $3 today. BT, on the other hand, has grown from around £1 per share to around £2.27 per share these days.
"Incumbents can spend heavily defending their legacy base but [build strategies] without accepting that they are legacy services, and that they're going to disappear no matter how successful the company is in stretching out their end of life," Ma said.
"The value to shareholders [of delaying change] on an incremental basis is actually very little; it's only investing in the future that makes sense to the shareholder."