Telstra chief feels confident of value

CANBERRA - The chief of Australia's Telstra said he was partly responsible for a 27 per cent fall in the top telco's share price over the past year, but was confident his plans for the company would restore value.

Speaking at the National Press Club in Canberra, Sol Trujillo also said the company would not invest around A$3 billion ($3.7 billion) in a new high-speed network as part of the overhaul unless it was governed by regulations giving shareholders a good return.

Telstra and the competition watchdog have been locked in talks for months over regulation for the new fibre to the node network, something the Government hopes will be resolved before it sells its A$24 billion stake in the company.

"We will not invest in fibre to the node unless we achieve regulatory settings that will permit Telstra's 1.6 million shareholders to earn a competitive return," Trujillo said.

Investment bankers have recommended the Government sell its stake in Telstra in October or November.

Telstra's share price has dropped to A$3.69 from A$5.06 since Trujillo took over as CEO on July 1 last year.

"The share price and what's happened to the share price, some of that I do own, but it's with the promise on the other end of a transformation," Trujillo said.

He said the drop in the price from A$7.40 in 1999, when the Government made its second share offering, was mostly due to the regulatory regime, which he said would continue to hit the stock's value unless changes to the regime were made.

Separately, the competition watchdog said the Government was in no way influencing its negotiations with Telstra in order to smooth the way for the planned sale of its 51.8 per cent stake.

"They've not put a scintilla of pressure on us in terms of the conduct of these negotiations," Australian Competition and Consumer Commission chairman Graeme Samuel said at a business lunch in Melbourne.

The commission is also working with eight of Telstra's competitors on an alternative proposal to the new network, which he expects to receive in the next few weeks.

Asked if it was conceivable that the commission could approve both plans, Samuel said: "Without question."

- REUTERS