Speeches by
Telstra’s CEO and CFO to foreign audiences late last week gave two
distinct but inextricably linked messages – Telstra does not want to
make major investments in Australia unless it receives a “safe harbour”
and it sees a big future in Asia if critical free trade agreements and
bilateral ties can be enacted.

Chief Financial Officer John
Stanhope repeated the big themes of Telstra’s recent network
transformation changes to American and European investor audiences last
week, but with an added emphasis – the direction of the Australian
regulatory regime under the Australian Competition and Consumer
Commission was “horrendous”.

Stanhope told a Citigroup
conference in London that the “first order impacts of what the ACCC
want for unbundled local loop is an impact on the enterprise value of
$6 billion. That’s… and the secondary impact of fly-through under the
wireless business, adds another $1.5, $1.8 billion. That’s a horrendous
outcome and I’m sure the board would have to reconsider the intention
of (our proposed) 28c (dividend) if that sort of outcome happened.”
Stanhope gave a similar message to a Goldman Sachs audience in New York
last Tuesday, and, on both occasions, said Telstra was in active
discussions on these regulatory issues with the government.

Over
in Los Angeles, CEO Sol Trujillo told a university faculty audience on
Thursday that after one year with Telstra he was surprised at the depth
and breadth of Australia’s links with Asia. In a speech mainly devoted
to detailing those links and the recent surge in Asia’s economic
status, he said “My company, Telstra, will also play its role in
supporting increased Asian regional cooperation and integration,”
pointing to its Hong Kong investments and supporting role for the
Beijing Olympics in 2008.

Trujillo said that negotiations over a
China-Australia Free Trade Agreement were key to creating the legal and
services framework for the services sector and would benefit firms such
as Telstra.

“It is one thing to deliver a finished product on
our neighbour’s doorstep; it is quite another to work together with a
local partner to provide a new telecommunications service.” Trujillo
also suggested there was a need for Australian business to enter into
direct dialogue with their China counterparts.

Peter Fray

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