Nine rivals gang up on Telstra

Australia’s smaller fixed-line telecommunications carriers on Monday threatened to build their own A$4.1bn ($3bn) high-speed broadband network unless Telstra, the former monopoly, clarified its own broadband plans.

In an unprecedented display of unity, Telstra’s nine main fixed-line rivals proposed the industry build a shared network, possibly in partnership with private equity or other financial investors. The initiative comes as Telstra is locked in discussions with regulators over access terms for its competitors to a high-speed broadband network that it plans to build on its own.

The impasse is the last significant regulatory obstacle to the much-awaited full privatisation of Telstra, which the government hopes it can complete this year.

“We believe the [fibre to node network] could be financed as an infrastructure asset, much like assets such as gas pipelines and motorways, which attract substantial debt and equity financing in the financial markets,” said Paul O’Sullivan, chief executive of SingTel Optus, Australia’s second largest telecoms group after Telstra.

“We will be inviting specialist infrastructure financiers to approach us with proposals for a [broadband] network based on the traffic volumes that we can jointly deliver.”

A high-speed national network is an important piece of missing infrastructure for Australia, which lags behind other comparable economies in broadband capacity. With time running out for a retail offering of Telstra shares this year, the partially privatised group has tried to ratchet up government pressure by threatening to abandon the network altogether.

The so-called group of nine
Telstra competitors said the best outcome would be construction of one network with shared
ownership.

They suggested they were prepared to proceed without Telstra, by far Australia’s dominant telecoms operator, if necessary.

But Telstra, which has said it is the only local telecoms group capable of financing and operating such a network, was dismissive of the plans, saying they amounted to “building a tent on a skyscraper”.

“This is at least the fourth time this announcement has been made,” it said. “If this consortium spent less time announcing and more time working, perhaps we’d have seen a real network plan by now.”

Some analysts were sceptical the plan, which was outlined in a detailed report prepared by two top consultancies, would succeed.

“This is all part of the game. There is a lot of posturing going on,” said a Sydney-based analyst.