New telco reforms from Labor have been branded as draconian by the Opposition

New telco reforms from Labor have been branded as draconian by the Opposition

Claims by the Labor government that splitting up Telstra would give everyone a ‘win-win’ result have been mocked by Telstra’s largest institutional shareholders as being ‘very detrimental’ to the shareholders and ‘draconian.’

The inherent risks in the government’s heavy handed approach have been highlighted by Senator Nick Minchin, the shadow minister for Broadband, Communications and the digital economy.

Senator Minchin said “Here you have major institutional shareholders strongly opposing the Government’s approach because they firmly believe it will destroy shareholder value. Telstra has 1.4 million shareholders many of them mum and dad investors and the Rudd Government has provided no evidence that they will be better off as a result of the forced break up of the company and forced divestiture of its key assets.”

He went on to add “The Rudd Government’s claims that its planned telco reforms are all about enhancing competition in the telecoms sector should not be believed.

Many experts believe that the government are merely attempting to end any competition against the National Broadband Network, which will become a Government-owned monopoly whilst taking away all of Telstra’s customers. A lot of people including the shareholders and industry expert feel that the Labor government’s only concern is to ensure the $43 billion NBN works no matter what the cost.

Senator Minch said “Labor’s motivation is purely political and its approach poses huge risks not only to the Telstra shareholders, but also to Australian taxpayers and consumers, particularly those living in rural and regional areas. The Government’s failure to conduct any analysis on the impact of a forced break-up of Telstra and refusal to subject its NBN plan to a thorough cost-benefit analysis highlights its complete recklessness and contempt for taxpayers.”

Source – Australia