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Conroy's $30b gaffe frays relations with Telstra

17 Nov 2009
00:00
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The already tense relationship between Australia's communications minister and Telstra was further frayed last month, after the minister accidentally leaked confidential information valuing the operator's copper network.

The gaffe comes at a sensitive time during the government's discussions with Telstra over its involvement in the National Broadband Network (NBN) project.

The report, which was based on information provided in confidence to the national competition regulator ACCC, was tabled into parliament before the sensitive information was censored.

It states that the network is worth around A$8 billion net and A$17 billion gross. But by a different valuation, the network could cost up to A$33 billion to replace.

Communications minister Stephen Conroy accepted full responsibility for the accidental leak during a parliamentary sitting. "We have admitted the mistake, [but] we are confident that constructive talks with Telstra can continue," he said.

Conroy has vowed to press on with plans to force the separation of Telstra, despite complaints from the operator and institutional shareholders. He says the government is committed to passing the legislation by the end of the year.

The bill impose functional separation forced on the formerly government-owned operator if it refuses to voluntarily separate.

Telstra's institutional investors have voiced their opposition to the proposal, publicly urging management not to agree to what they called "draconian impositions on Telstra."

But Conroy rejected their concerns, pointing to a recent poll of 17 brokers in which 11 had a "buy" recommendation on Telstra, and only three suggested investors sell, Conroy added. "This suggests that many in the market also see a win-win outcome as possible."

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