Telstra Structural Separation

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All Systems Go – Telstra finalises NBN Agreement

Telstra, the NBN Co and the Commonwealth Government have today announced a finalised definitive agreement for Telstra’s inclusion into the National Broadband Network project and the structural separation of the company.
 

After a three year process of convoluted talks, negotiations and revised plans that were recently accepted by the Australian Competition and Consumer Commission (ACCC), Telstra CEO David Thodey stated that the company was very pleased (and most likely relieved) for the positive outcome for their customers, employees and shareholders.
 

The agreement is expected to provide Telstra with approximately $11 billion in post-tax net over an extended period.
 

Read more about the media release announcement at Telstra’s Media Centre – Telstra finalises $11 billion NBN agreements
 

ACCC approves Telstra structural separation plan

The ACCC have officially announced their approval of Telstra’s structural separation plans by today accepting their revised undertakings.
 

Prior to this announcment, the competition watchdog originally knocked back Telstra’s first submission by suggesting the Telco had not done enough to ensure they were going to play fair in both wholesale and retail operations after they were structurally separated.
 

More specifically, the ACCC were concerned with Telstra’s commercial interests involving wholesale ADSL contracts with competitors, and promoting wireless services that would compete against the NBN.
 

Today’s ACCC announcement now alleviates all these concerns and opens the way to a finalised Telstra-NBN Co agreement and has essentially signalled a major shift of structural reform within the Telecommunications industry and will thus strengthen competition as a result.
 

ACCC Press Release – ACCC accepts Telstra’s structural separation undertaking
 

Telstra finally signs deal for retail NBN services

After years of protracted discussions, negotiations and amendments with NBN Co, Telstra appears to finally be over the line and will commence selling retail broadband and telephone services across the National Broadband Network.
 

The deal which was signed by respective parties over the weekend comes as the Telstra recently lodged revised structural separation documents with the ACCC that will see the company split into retail and wholesale divisions.
 

It’s expected that the revisions will now appease the competition watchdogs’ previous requests for separation and wholesale requirements and hence will pave the way for the finalisation of the $11 billion dollar Telstra-NBN Co deal.
 

Telstra is also the last major Telecommunication carrier to have signed up to the NBN and now joins the likes of Optus, iiNet, TPG, Primus and others who have already signed with the NBN Co earlier this year.
 

The announcement of the finalised NBN Co – Telstra deal could come as early as this week.
 

Read more at smh.com.au – Telstra signs up for NBN fibre-optic superhighway
 

Nothing stopping Telstra separation and NBN deal

The ACCC and David Thodey have just publicly indicated that all concerns involving the deal with the government, structural separation and the National Broadband Network have now been resolved.
 

Mr Thodey, who is CEO of Telstra, announced that a revised structural separations document has been lodged with the ACCC which should now clear the way for the deal with the NBN Co. This process could be finalised within weeks and significantly push plans forward for the roll out of the NBN.
 

With the current prime ministerial leadership battle underway, the month of March could prove an important time for progress on many fronts let alone Telstra and the NBN.
 

Read more at smh.com.au – Telstra clears way for NBN deal
 

Further delays on Telstra structural separation

A last minute decision into Telstra’s revised structural separation plans has witnessed the ACCC issue an enquiry into wholesale ADSL pricing.

 

Essentially the ACCC is concerned that Telstra will continue to dominate the supply of retail and wholesale DSL services to its competitors and thus charge premium prices even after it is structurally separated.

 

It’s believed that there could be some ‘regulatory gaps’ that Telstra could possibly exploit in the Telco’s revised separation undertakings so its upon the ACCC to investigate this matter through an enquiry which is expected to be completed by January 19 2012.

 

Read more at itnews.com.au: Telstra rivals welcome wholesale inquiry

 

Telstra Shareholder Vote Yes for NBN Deal

Telstra shareholders signalled their approval for the NBN deal with a remarkable 99.09% of proxy votes in favour of the transaction which will net the Telco a staggering $11 billion for decommissioning its copper network and rolling customers on to the fibre National Broadband Network.

With regulatory uncertainty clouding the Telco for the past couple of years, Telstra’s board members would be quietly celebrating the outcome of the shareholder vote as it almost instantaneously provides stability and also places the Telco $4.7 billion greater than under the best available alternative.

All that stands in the way of a fully fledged NBN now are the concerns raised by the ACCC in relation to Telstra’s structural separation undertaking (SSU) that were submitted to the competition watchdog some time ago for approval.

Youcompare expects that Telstra will address and rectify these issues promptly as failure to do this by 31st December 2011 would activate a compulsory functional separation which would leave the ACCC and Communications Minister, Senator Stephen with greater control of how the Telstra’s retail and wholesale businesses would be separated.

Telstra NBN deal gets nod from shareholders association

The Australian Shareholders Association have signalled their approval for the Telstra $11 billion dollar NBN deal along with Telstra’s independent expert ‘Grant Samuel’, who has also indicated that the Telco would be $4.7 billion dollars worse off without it.

The ASA have a $150 million dollar investment in Telstra which equates to 10,000 proxy votes and its statement is the strongest sign yet that deal will get the full stamp of approval at Telstra’s upcoming AGM in Sydney next Tuesday 18th October 2011.

They believe the Telco has no other option than to embrace the deal with the government and feel that all shareholders should vote for the agreement as it will also give the board greater bargaining power should further negotiations take place.

After obtaining shareholder approval, all that stops the Telstra NBN deal from going through is the recent structural separation concerns aired by the ACCC. These issues are expected to be resolved without contention which would then pave the way to a Telstra NBN deal.

Telstra lodge separation documents with ACCC

In what’s expected to take seven years to complete, Telstra have taken a huge step toward finalising their structural separation plans by lodging detailed documents with the Australian Consumer and Competition Commission on how the Telco will undertake the transformation.

Almost coinciding with the NBN target date of completion, in which most Australian premises will have been migrated away from Telstra’s copper PSTN to the national broadband network, Telstra is expected to commit to the completion of the restructure by 1st July 2018.

Read more about Telstra lodging separation document with the ACCC at iTWire.com

Telstra Split Decision – Structural Separation Imminent

After months of speculation in regard to the ongoing structural separation saga of Telstra, it has been revealed that the decision is now inevitable and the once monolithic incumbent will now be separated into retail and Wholesale divisions.

The split doesn’t stop at Telstra internal divisions either, as it also involves the severing of affiliations with FOXTEL and its Cable network along with ceasing all operations in conjunction to new wireless broadband development.

Telstra have the option to separate voluntarily, otherwise new regulation legislation will open the door for the government to do so for them. This decision from Senator Stephen Conroy has now paved the way to facilitate the transition of the Industry across to the new National Broadband Network when previous Labor and Liberal governments failed to do so. The right call for Australia’s future, and a brave one too.

Although Telstra’s share price initially fell almost 5% in early morning trading, Mr Conroy has suggested that the separation could make it possible for Telstra shareholders, and all Australians, to benefit from the outcome. Market analysts agree that the decision would be greeted with a neutral reaction.

Interesting times ahead for the Teleco industry…


New Telstra CEO David Thodey to replace Sol Trujillo

Sol Trujillo rides off into the Mexican sunset taking with him a suspected $20 million dollar bon voyage payout, while incoming CEO, David Thodey, is left to pick up the pieces and rekindle the severed relationship left behind between Telstra and the Australian Federal Government. The appointment of Thodey has also seen the resignation of Donald McGauchie, which is effective immediately, along with the appointment of Catherine Livingstone who will take on the company’s chair.

David Thodey was a likely internal candidate to succeed Trujillo. For one, he is an Australian who knows the Australian environment, and possibly a key that won Mr Thodey the board’s vote over three other rivals, including a British executive, was his close relationship with many key Government officials. To the contrary of Mr Trujillo, David Thodey has a calm nature and was not closely associated with Mr Trujillo, so this should also give him a great advantage in the political arena.

Trujillo was essentially hated by the Australian Federal Government. He only had himself to blame for being dropped from the Christmas Card mailing list as his hostile approach to the Australian Telecommunication environment and Federal Government made Trujillo highly unpopular. What’s more, in his time at Telstra since 2005, Good ol Sol personally axed 10,000 Telstra Jobs and was not liked by the ACCC, unions, customers or his own employees. His tenure at Telstra also witnessed the nose dive of Telstra shares by more than 25%, so I guess its safe to say that many Australian Mum’s and Dad’s are also on the list.

David Thodey has definitely got a huge work load ahead of him if he’s going too turn the tide. On his list of priorities will be the new National Broadband Network and the looming Structural Separation of Telstra whilst fending off concerns raised by investors. He certainly appears to have the port folio to pull it off and we wish him well.



David Thodey Background Summary
Kellogg Post-Graduate School General Management Program at Northwestern University in Chicago
Bachelor of Arts in Anthropology and English from Victoria University in New Zealand
Pre 2001 – Chief Executive Officer IBM Australia / New Zealand (22 year career)
2001 – Group Managing Director of Telstra Mobile of Telstra Corp
2003 – Group Managing Director of Telstra Business and Government of Telstra Corp

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