Telstra says breakup will come at a steep price

Telstra has issued a staunch message to the Australian government's call to break up the incumbent telco: 'if you're going to make us split up, it's going to cost us $1.09 billion.'

One option that Telstra has put on the table is the possible sale of its wireline assets into the government's $39.2 billion National Broadband Network (NBN) initiative. What Telstra continues to fight is a proposed government legislation where Telstra would either voluntarily separate its network assets from retail operations or be forced into a "functional" separation of its respective divisions.  

There are, of course, two perspectives on the separation issue. Australia's government points to the success of dismantling other telecom monopolies such as BT and Telecom New Zealand.

However, Telstra Chairwoman Catherine Livingstone told shareholders at the company's annual meeting that if Telstra was forced to separate its operations it would also cause disruption to the network systems it recently put in place.   

"What we do know is that, if the U.K. approach is adopted, it would force us to pull apart the new IT systems we have just built as part of transformation, and would cost anywhere between A$500 million and A$1.2 billion and take at least five years," Livingstone said.

For more:
- Total Telecom via Dow Jones has this article

Related articles
Telstra rails against government-mandated telecom reforms
Government mandates Telstra must break into two units
Telstra pledges support for Australia's NBN
Telstra considering voluntary breakup to beat government threats