Telstra investor warns on NBN «risk»

Nicole McCormick
16 Mar 2010

Telstra’s second-largest shareholder, fund manager Australian Foundation Investment (AFI), is urging Telstra shareholders not sell the firm’s fixed-line assets to the government at a bargain basement price.

''Telstra is entitled to get appropriate value for its assets, including its customer traffic,” according to AFI managing director Ross Barker, the Sydney Morning Heraldreported.

Telstra shareholders are entitled to a “fair outcome” by the government, Barker told Telstra shareholders.

The Federal Government is angling to buy Telstra’s copper network as part of its controversial next-generation fiber network project, which could cost as much as A$43 billion ($39.26b).

The government has said that it will force Telstra to sell its 50% stake in pay TV operator Foxtel and forbid it from bidding for LTE spectrum if it fails to ink a fixed-line sale deal with NBN Co.

For its part, Telstra is maintaining that any fixed-line asset sale to NBN Co. – reportedly in the region of A$8 billion - would need to be ratified by a formal shareholder vote.

Barker also warned Telstra shareholders that there was a risk that the state-owned NBN could become a government-legislated monopoly.

''[The] government's actions continue to raise sovereign risk issues for investors,'' he said.

Under a draft bill, the state-backed NBN would be permitted to offer retail services as well as acting as a wholesaler.

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