Government firm on Telstra break up legislation by end-2009: Australian minister

According to Australian Communications minister Stephen Conroy, activist shareholders opposing the splitting of Telstra, the Australian telecom major have been misguided into believing that the proposed legislation to function ally or structurally separate Telstra would erode share value. Conroy said at the CommsDay Melbourne Congress that shareholders should be looking at the performance of the company itself.

He said that Telstra had made it very clear in the T3 prospectus as appropriate that the forward looking regulatory settings could change. He added that despite the disclosures and their extensive consultations on the regulatory reforms, certain large institutional investors have expressed surprised at the government's recent announcements. He added that the analysis of some of the commentators was not comprehensible.

He pointed out that under the previous Telstra management, the company's share price fell almost 40 per cent from when Sol Trujillo was appointed to the time of his exit. He said that during the period nothing was heard from the large institutional investors and they had at the time never questioned the strategy of the previous Telstra management.

This week two institutional shareholders had testified before a senate committee on the legislation objecting to any Telstra split.

Australian Foundation Investment Company MD Ross Barker and Investors Mutual director Anton Tagliaferro deposed before the hearings in Melbourne to decry the legislation as overbearing. The contention met a barrage of questioning from Labor Senator and industry advocate Kate Lundy.

Conroy pointed to the fact that Telstra's share price remained stable since the legislation was introduced. He cited the fact that analysts still continued to back the company's stock. He lamented the fact that the pessimistic analysis of the large institutional investors may pull down the stock due to the negative pressures they tend to generate.