Telstra ACCC agreement before shareholder vote in doubt
Telstra have advised the ASX that they do not expect the ACCC to approve their plans to structurally separate the company and transfer 10 million fixed line customers on to the NBN Co’s new fibre network before their upcoming shareholders vote.
The two biggest hurdles that Telstra need to clear before it can reap the $11 billion deal with the NBN Co are still up in the air although the Telco remains confident that they will eventually get there.
The first issue was to have the structural separation plans approved by the ACCC prior to the shareholder vote on October 18. This has yet to be resolved, however Telstra have declared they will still proceed with the second hurdle, which is to take their separation proposal to the shareholders at the upcoming annual meeting.
“We do not expect ACCC approval will be received before the AGM,” Telstra told the ASX.
Updated by Ronnie on October 3, 2011
Despite all the recent media speculation stating that the ACCC was deeply concerned with Telstra’s structural separation submission and that it may set back the National Broadband Network roll out, Telstra CEO David Thodey has come out and quashed all reports by stating that the Telco is still on track to reach a deal with the competition watchdog very soon.
“It’s no change to what we’ve said before,” he said. “We’ve got some work to do and we’re working productively with (the ACCC).”
Mr Thodey said that he expects approval from Australian Competition & Consumer Commission to be reached in time before the Telxo brings it’s retail and wholesale structural separation plans to a shareholder vote on October 18, 2011.
Updated by Ronnie on September 9, 2011
Telstra CEO David Thodey admitted that he wasn’t surprised with the ACCC’s warning about the Telco’s structural separation plans. This statement comes as a direct result from the recent concerns aired by the ACCC in relation to Telstra’s wireless services competing against the NBN Co’s upcoming national broadband network.
According to an article at Computerworld, Mr Thodey stated that… “The ACCC has raised a number of concerns but they do not really come as a surprise to us at all,” and… “We to believe the issues can be resolved in away consistent with our principle of protecting shareholder value and the company will continue to work closely with the ACCC to address the concerns with a view to obtaining acceptance to the structural separation undertaking and draft migration plan before the AGM on 18 October 2011.”
Telstra and the ACCC have been in regular consultation over the structural separation of the Telecommunication provider. So I suspect that the emergence of these recent events will not in any way hinder the separation process nor the upcoming shareholder vote.
Updated Friday 02/09/2011
A fundamental component for the Government’s vision of a National Broadband Network to become a reality is the structural separation of Telstra. This has now hit a major hurdle with the ACCC flagging concerns over Telstra’s plans to restructure the company.
It was expected that Telstra’s submission to the ACCC would pave the way to an $11 billion deal with the NBN Co to share it’s vital infrastructure. However a green light from the competition regulator has not been granted as they are concerned with the Telco’s pre-conditional promise of ‘not competing’ with the NBN through its wireless services offerings.
This concern could be a major setback for the NBN’s development schedule and Telstra’s structural separation plans unless immediate action is taken by the Telco to make important changes to their proposal. Although this latest issue should not halt NBN proceedings entirely, it still managed to unsettle investors as Telstra shares took a dive after the announcement was made.
Opposition communication spokesman Malcolm Turnbull didn’t waste any time to attack the integrity of the Government by stating the comments showed the Government was putting its political interests ahead of the national interest. While the Minister of Communication Stephen Conroy said this issue was a matter for the ACCC and he looked forward to the final determination.