Telstra rebounds: I heard it on my iPhone

James Riley
Wednesday, 16 September 2009 18:32

IT Policy - Government Tech Policy

A day after Government announced structural reforms for the telecommunications industry that wiped $2 billion off Telstra shareholder value, the company’s share price has rebounded, clawing back nearly all of its lost ground.

Telstra shares climbed 13 cents – or more than 4 per cent – to close at $3.24, just a cent lower than where it had been when the Government announced the regulatory changes.

And Communications Minister Stephen Conroy did not hide his enjoyment of Telstra's improved share price fortunes, taunting the opposition (and in particular shadow minister Nick Minchin) and earning himself a rebuke from the President.

Senator Conroy: (Holding iPhone up triumphantly) "For the interest of Senator Minchin, this is called an iPhone. It actually produces a graph of the Telstra share price, of where it is today."

Senate President: "Senator Conroy, you know that is disorderly!"

Senator Conroy: "What you are able to find on this piece of technology is that the Telstra share price has rebounded!"

Some analysts said once the shock of the announcement had subsided, investors dived back into Telstra shares on the realisation some of the market uncertainty about future regulation – which had stifled its share price – had been removed.

The regulatory reform, together with Telstra share value issues, dominated Senate Question Time for the second day.

Senator Conroy again said blame for market failure in the telecommunications can be sheeted to governments of both persuasions for regulatory decisions made over the past 20 years.

"What I said yesterday was that, because of policy failings that stretch back over two governments over 20 years, Telstra was allowed to become just about the most vertically integrated telco in the world," he told the Senate.

"We want to redress the mistakes made by the two former governments, so we have said that we will restrict Telstra from moving into the next generation of spectrum – which will be auctioned in a few years – to ensure that it cannot dominate every single platform.

"What we have seen is that Australians are suffering from the highest prices in the world for broadband, virtually, and the slowest speeds, virtually. That is not acceptable because it is selling out our children, our small businesses, our educational future, our health future and our energy efficiency future."

Senator Minchin said the plan to restrict Telstra’s ability to acquire additional spectrum made no sense, because the mobile market was one area where the company did not command a majority market share.

"Any move by the Government to deprive a business of competing in a market where its competitors have the majority of the market share defies logic," Senator Minchin said.

"Senator Conroy was unable to provide any explanation as to the rationale behind this proposed measure."