Telstra claims structural separation could cost AUD1.2 billion

4 Nov 2009

Australian fixed line incumbent Telstra has claimed that an enforced structural separation using a model similar to that of BT in the United Kingdom could cost as much as AUD1.2 billion (USD1.1 billion), Bloomberg reports. In addition, the telco said that it expects any such split to take more than five years, with Telstra saying it would need to ‘pull apart’ its information technology systems. The operator is facing the enforced split as part of proposed telecoms legislation which also includes increased powers for the country’s antitrust regulator. As part of the mooted laws, Telstra has been called on to voluntarily separate or face the possibility that it will be barred from acquiring any new wireless spectrum for its mobile arm. The legislation is currently under review by the Australian parliament, and communications minister Stephen Conroy has said he would like an agreement with Telstra in place before the end of the year. For the incumbent’s part, chairwoman Catherine Livingstone noted: ‘Telstra will continue to negotiate in good faith with the government…we want to find a mutually acceptable solution.’

In separate but related news, Australian IT reports that Telstra has said that it effectively completed its AUD3.9 billion IT transformation project. The operator said that it considered the project a success, despite the budget escalating by almost AUD1.5 billion and the self-imposed target of shutting down 80% of its legacy systems being missed. Telstra CFO John Stanhope said that the project had delivered around AUD307 million in cost savings and additional revenue in this financial year, and these financial benefits are forecast to increase to AUD1.2 billion over the next two years.