ACCC proposal pinches Telstra
The Australian Competition and Consumer Commission (ACCC) proposal for telecommunications giant Telstra Corporation Limited (ASX: TLS) to lower its price will send ripples.
The competition regulator released a draft report last week which suggests a $20 decrease in the price of Telstra's basic wholesale telephony service. According to ACCC calculations, the 23 percent price reduction is in line with its new system of calculating prices based on the assets and costs associated with providing services.
Under the draft pricing system, ACCC's valuation of Telstra's customer access network (CAN) is down from about $23 billion to $7.5 billion.
RBS analyst Ian Martin said the reduced valuation was 'an odd assessment' provided that the National Broadband Network (NBN) company was to pay $9 billion to Telstra. The $9 billion payment was for the use of Telstra's ducts, the migration of its customers to the NBN, and the decommissioning of its copper network.
Martin emphasized that “if the CAN value really was that low, there wouldn't have been an NBN agreement for shareholders to consider... If the ACCC's mindset is to adjust access prices to offset whatever benefit Telstra has negotiated in the NBN deal, that would seem to us to negate the certainty of the deal and the Prime Minister's commitment to regulatory certainty.”