Wednesday, October 07, 2009

Telstra Investor: Tell MP's To Help Us

Telstra's second biggest shareholder, Australian Foundation Investment Company (AFIC) , has provided its investors with a letter to send to MP's. The letter hopes to influence MP's to disallow any structural breakup of Telstra, because that might hurt the share price. ie the letter is lobby MP's to protect their investment. Here, I declare that I do not hold any Telstra shares.

The government proposes to force Telstra into separating its retail ('telco') and infrastructure businesses. The reasons for this are:
  • Telstra has long drawn the attention of the ACCC because of its anti-competitive practices
  • Telstra has a significant history of belligerence against the Federal Government (former and current), as it seeks to exercise monopolistic business practices
  • the sale of Telstra "lock stock and barrel" to form a private, largely monopolistic company was always bad policy. (from the previous Federal Government led by John Howard)
  • Telstra made only a token, even mock, tender for the rollout of the National Broadband Network (NBN). Its tender deliberately did not meet specified requirements, and it was excluded. It then complained about its exclusion!
  • establishing a separate business entity would mean that Telstra (the retail telco) would be forced to pay similar, or identical, rates to its competitors for access to the infrastructure. It would open the retail telco to more competition.
AFIC's letter seeks to impress upon MP's the need to protect their money (investment). But that is not the role of either MP's, or Government: they have a democratic responsibility to act in the best interests of ALL Australians. I believe that protecting the investment money of a minority by allowing Telstra to set the agenda, would be contrary to the best interests of Australians, contrary to our democratic ideals, and unethical.

MP's should vote FOR the structural reform of Telstra.