KEY POINTS:
After threatening words from Australian communications minister Helen Coonan that the Government may force structural separation of Telstra's business units in the name of competition, Coonan has now put the issue on ice.
She's deciding to wait and see what the companies seeking to be involved with the upcoming A$4 billion fibre network in Australia will need to make the plan work.
Telstra has already been operationally separated to give competitors equal access to its divisions as Telstra's own retail arm but as The Age reports Irish telco split: the New Zealand Government's plan for the operational separation of Telecom has "gained the attention of Australian politicians because the model presents a more rigorous form than the operational separation that currently applies to Telstra."
But as the same article points out, Irish telco Eircomm is actually proposing selling its retail business, retaining its network and wholesale division. It claims that's the best scenario for retaining shareholder value.
Eircom's owner, Australian investment bank Babcock and Brown, which acquired 57 per cent of Eircom in an A$8 billion deal last year, is now trying to convince Coonan that the same deal will have the best result for Telstra.
There's some merit to the argument, which observers in favour of structural separation put forward here earlier in the year.
With an independently owned and operated network, the regulatory environment becomes much simpler - everyone is given access at the same terms with none of the regulatory chain-dragging that Telecom has engaged in - such as with the pathetic terms Telecom has dictated for the roll-out of naked DSL.
It also allows the retail arm to focus squarely on its customers. It makes sense that shareholders would be happier with this arrangement than more potential uncertainty. So why do both the Australian and New Zealand governments have such an aversion to structural separation?
Well, they both claim that the impact on shareholders would in fact, be detrimental. With Telstra and Telecom making up such large percentages of the ASX and the NZX respectively, structural separation is too scary a scenario for regulators. All eyes will be on Eircom now to see if the Irish Government accepts its separation plan.
Out today is the annual report for state-owned telecoms and broadcasting operator Kordia.
It looks like a solid result - revenue at $264 million in the year to June 30 up from $201 million last year. EBIT was up $3 million to $24 million. Total dividend for the year - $8.4 million.
The result excludes the $24 million acquisition of Auckland internet provider Orcon which was finalised on July 2. Interestingly, the breakdown of the cost of the acquisition puts net assets acquired at just $547,000, with $24.2 million "in goodwill and other intangibles".
In other words, the deal was all about buying market share and the Orcon brand.
