ALP to push Telstra to quit Foxtel
By Michael Sainsbury
February 12, 2004
A FUTURE Labor government would pressure Telstra to sell its 50 per cent stake in Foxtel as part of a risky hands-on plan to refocus the telecommunications company on its core business.
Signalling a more interventionist approach, Labor would curb Telstra's ability to charge families more for access to its network, which could threaten its revenue growth.
Opposition communications spokesman Lindsay Tanner told The Australian yesterday: "We would be a more hands-on shareholder."
In a bold move, Labor will target Telstra's Foxtel shareholding as the pay-TV company spends $600 million on a new digital network.
"We have serious concerns about Telstra's shareholding in Foxtel. We have a range of options available," Mr Tanner said.
Those alternatives range from a ministerial direction, enforcement by the regulator or the more subtle approach of advice to the Telstra board.
The Australian Competition and Consumer Commission last July recommended the Government inquire into the possible sale of its Foxtel stake by Telstra.
But despite commissioning the advice, former communications minister Richard Alston dismissed the recommendations.
"We fully support the Australian Competition and Consumer Commission," Mr Tanner said. "We think the ACCC does a good job.
"We are concerned about the content business, not the cables."
Telstra owns the fibre optic cable network that passes more than 2 million Australian homes, and Foxtel provides the pay-TV service.
While there have been occasional discussions between Telstra's partners in Foxtel - News Limited (publisher of The Australian) and Publishing and Broadcasting - about equalising their shareholdings, Mr Tanner said for Telstra it was "all or nothing".
But Mr Tanner warned that if Telstra decided to make a "more exotic" purchase in the media sector between now and the federal election, it would be more forceful in its direction towards Foxtel.
An ALP government would also remove Telstra's power to continue its controversial program of raising monthly line rentals, putting Telstra's profits at risk for its 1.8 million shareholders. Analysts said this could wipe about $500 million from the company's revenues over the next two years.
The moves would be part of a broader program by Labor to refocus Telstra's business on its Australian voice and data network. "A majority shareholder has that shareholding for a reason: to ensure high-quality telecommunications services for all Australians," Mr Tanner said. "In the wake of that it would seem that the elaborate and very large overseas investments by Telstra have been questionable."
Another major policy move by a Labor government would be to force Telstra to further separate its retail divisions and the division that sells network services to its competitors.