Opposition Labor Party vetos own plan to split Telstra

7 Feb 2003

An inquiry launched at the back end of 2002 into splitting up Australian incumbent Telstra [Australia: TLS.AX] into two separate entities has been abandoned after the party in opposition rejected its own proposal as too expensive and convoluted to carry out. The plan to hive off the PTO’s network from its service operations was suggested by the Labor Party last year and, despite objecting to the idea, the government set up a parliamentary inquiry in December which was due to have been completed in late March 2003. However, with the public hearings now ready to begin Labor’s telecoms spokesman Lindsay Turner said they had ditched the proposal as ‘pursuing that path seems to be simply too costly and too complex to be worthwhile’. The announcement is a blow to the aspirations of the Competitive Carriers Coalition (CCC), a group made up of five rival operators, which in February 2003 repeated the call for Telstra to be broken up and requested a new range of remedies, including greater powers for the regulator to force companies deemed to be ‘behaving anti-competitively’ to sell parts of their business. The CCC argues that six years after deregulation the telecoms playing field is still tilted with Telstra making 95% of the sector’s profits and banking three out of every four dollars spent on communications.