Telstra price tumbles after ULL ruling

15 Aug 2006

Shares in Australian incumbent Telstra fell 2.4% yesterday on the back of an announcement that the telco should cut the unbundled local loop (ULL) access prices it charges one of its rivals. Telstra has lost almost a quarter of its market value over the past year, undermining the government’s plan to sell its remaining 51.8% stake in the company. The Australian Competition and Consumer Commission (ACCC) ruled that Telstra should only be allowed to charge iiNet subsidiary Chime Communications AUD17.7 (USD13.5) a month for access to its copper wire network, compared with the AUD22 it is currently charging. The ruling is a major blow to Telstra, which has been locked in a long running battle with the ACCC to raise its standard ULL charge to AUD30. Whilst the decision relates only to Chime, it may be an indication of the ACCC’s final decision on ULL pricing, which is expected within a fortnight. Telstra’s 1.6 million individual shareholders, many of whom invested in the telco largely because of its high and steady dividend payout, are now concerned that there will be a cut in the annual dividend, currently AUD0.28 per share.

Australia, Telstra (incl. Belong)