Australian government forces Telstra to split

Telstra, Australia's largest telecom services and broadband provider, has been told by the Australian government to split its retail and wholesale businesses voluntarily or face a law-enforced separation as the Kevin Rudd government prepares to roll out its $37-billion National Broadband Network (NBN).

Melbourne-based Telstra, a state monopoly, earlier known as Telecom Australia was privatised in 2006. It will now have to separate its infrastructure and retail arms or face the threat of the government bringing in new laws to force the break up, and sell off its cable network and the 50-per cent stake it holds in Foxtel - Australia's largest pay television company.

The previous Australian government, led by John Howard, failed to split Telstra's retail business from its network when the huge state-owned company was being privatised in 2006. It still has a 17-per cent stake in Telstra through Australia's public servants pension fund.
Telstra will also be blocked from buying new licenses for wireless services and expanding its wireless broadband spectrum, if does not comply with the government demand.

Rival telecom operators like Australia's second largest telecom provider Optus, owned by Singapore Telecommunications, Vodafone, the local arms of Telecom Corp of New Zealand and the country's competition regulator, have repeatedly campaigned for Telstra's break-up. (See: Split Telstra for a viable broadband network, says rival Optus / Regulator wants Telstra to be split)

Since Telstra owns nearly all the telecom infrastructure, other rivals are forced to deal with Telstra, which has long been accused of charging high access fees.

By separating Telstra's network and wholesale business from the retail business, Telstra's rivals will be able get the same financial terms and conditions as those enjoyed by Telstra's retail business.