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November 25, 2010, 9:14 PM EST
By Mark Lee and Robert Fenner
(Adds loss of monopoly in second paragraph.)
Nov. 26 (Bloomberg) -- Telstra Corp., Australia’s biggest phone company, may use A$11 billion ($10.7 billion) of compensation for joining the government’s nationwide fiber Internet network to fund acquisitions in new technologies and in Asia, Chief Executive Officer David Thodey said.
Under the government plan, Telstra will shut down its copper-wire network, losing its monopoly as the wholesaler of fixed-line services. The company will join rivals including Singapore Telecommunications Ltd.’s Optus in leasing infrastructure from the government network known as NBN Co. when it is completed by 2018.
“Having the cash gives us the flexibility,” Thodey said in an interview in Hong Kong yesterday. “We have got to create new revenue and profit pools in the business.”
Australia’s Upper House Senate voted today to split Telstra’s copper network from its retail businesses, clearing the way for approval of the national broadband network. Shares of the Melbourne-based company have gained 9.2 percent this week as Prime Minister Julia Gillard won support from independent lawmakers for Telstra’s structural separation and compensation.
Telstra’s compensation is also subject to shareholder approval at a vote scheduled for next year.
The company, Australia’s biggest operator of fixed-line, mobile and Internet services, may use some of the proposed payout for share buybacks and dividends, Thodey said.
Asia Investments
Thodey plans to invest in wireless, entertainment and so- called cloud-computing services, as well as expand in Asia, where Telstra owns CSL New World Mobility Ltd., Hong Kong’s second-largest mobile-phone operator.
“We will also consider M&A activities to acquire technologies and capabilities,” Thodey said.
Telstra declined 0.7 percent to A$2.86 as of 12:47 p.m. in Sydney trading, snapping five straight days of gains. The stock has declined 17 percent this year, compared with a 5.6 percent drop for the benchmark S&P/ASX 200 index.
Telstra said Nov. 19 its board is concerned about the company’s “undervalued” share price and intends to maintain a dividend payment of 28 Australian cents this year and next.
Gillard this week released part of the NBN’s corporate plan, boosted consumer protection under the planned network, and established a committee to oversee its rollout to woo independent Senators Steve Fielding and Nick Xenophon. The government already has the support of the Australian Greens.
Parliament extended its sitting to today as debate continued on the legislation to split Telstra’s businesses. Both houses of parliament are scheduled to debate the broader national broadband plan next year.
The A$35.7 billion network is the nation’s largest infrastructure project, laying fiber optics to reach 93 percent of the population. The remainder will be served by wireless and satellite coverage.
The expected A$11 billion payment to Telstra is meant to offset revenue losses from its fixed-line operations. The amount will be distributed over 10 years and will be adjusted to reflected the so-called NPV, or net present value, Thodey said.
--Editors: Lena Lee, Chua Kong Ho.
To contact the reporters on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net; Robert Fenner in Melbourne rfenner@bloomberg.net.
To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net.
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(Adds loss of monopoly in second paragraph.)
Nov. 26 (Bloomberg) -- Telstra Corp., Australia’s biggest phone company, may use A$11 billion ($10.7 billion) of compensation for joining the government’s nationwide fiber Internet network to fund acquisitions in new technologies and in Asia, Chief Executive Officer David Thodey said.
Under the government plan, Telstra will shut down its copper-wire network, losing its monopoly as the wholesaler of fixed-line services. The company will join rivals including Singapore Telecommunications Ltd.’s Optus in leasing infrastructure from the government network known as NBN Co. when it is completed by 2018.
“Having the cash gives us the flexibility,” Thodey said in an interview in Hong Kong yesterday. “We have got to create new revenue and profit pools in the business.”
Australia’s Upper House Senate voted today to split Telstra’s copper network from its retail businesses, clearing the way for approval of the national broadband network. Shares of the Melbourne-based company have gained 9.2 percent this week as Prime Minister Julia Gillard won support from independent lawmakers for Telstra’s structural separation and compensation.
Telstra’s compensation is also subject to shareholder approval at a vote scheduled for next year.
The company, Australia’s biggest operator of fixed-line, mobile and Internet services, may use some of the proposed payout for share buybacks and dividends, Thodey said.
Asia Investments
Thodey plans to invest in wireless, entertainment and so- called cloud-computing services, as well as expand in Asia, where Telstra owns CSL New World Mobility Ltd., Hong Kong’s second-largest mobile-phone operator.
“We will also consider M&A activities to acquire technologies and capabilities,” Thodey said.
Telstra declined 0.7 percent to A$2.86 as of 12:47 p.m. in Sydney trading, snapping five straight days of gains. The stock has declined 17 percent this year, compared with a 5.6 percent drop for the benchmark S&P/ASX 200 index.
Telstra said Nov. 19 its board is concerned about the company’s “undervalued” share price and intends to maintain a dividend payment of 28 Australian cents this year and next.
Gillard this week released part of the NBN’s corporate plan, boosted consumer protection under the planned network, and established a committee to oversee its rollout to woo independent Senators Steve Fielding and Nick Xenophon. The government already has the support of the Australian Greens.
Parliament extended its sitting to today as debate continued on the legislation to split Telstra’s businesses. Both houses of parliament are scheduled to debate the broader national broadband plan next year.
The A$35.7 billion network is the nation’s largest infrastructure project, laying fiber optics to reach 93 percent of the population. The remainder will be served by wireless and satellite coverage.
The expected A$11 billion payment to Telstra is meant to offset revenue losses from its fixed-line operations. The amount will be distributed over 10 years and will be adjusted to reflected the so-called NPV, or net present value, Thodey said.
--Editors: Lena Lee, Chua Kong Ho.
To contact the reporters on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net; Robert Fenner in Melbourne rfenner@bloomberg.net.
To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net.
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