Telstra considering voluntary breakup to beat government threats

Australian telco Telstra is considering a voluntary separation of its wholesale and retail divisions, as well as the sale of some assets to the Australian government's next generation network (NGN) project. The move is a dramatic shift from the "We'll dictate terms" strategy pushed by the company's chairman Donald McGauchie and outgoing CEO Sol Trujillo.

Telstra has shifted its positioning as part of an effort to keep the Australian government from stepping in and imposing its own conditions upon the business. A special committee of directors and executives headed up by McGauchie will negotiate with the government on how Telstra might participate in Australia's multi-billion dollar national broadband network project and how it might avoid being forced to do things such as sell off "a range" of valuable assets, says The Australian.

Options under consideration by the company include Telstra selling some of its existing fiber assets to the new network in exchange for a minority stake in the government-owned NGN operating company. The government would like to reduce the cost to taxpayers of building and operating the network.

The Australian government believes that the current regulatory system of limited operational separation of Telstra's wholesale network operations has failed to encourage competition and wants to act fast to break apart Telstra's wholesale and retail businesses.

For more:
- Read The Australian, mate! Article.

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