Telstra shares hit an all time low of $2.93 yesterday after the competition regulator the ACCC launched legal action against the company claiming it refused to allow competitors to access its copper-wire network.
The news saw the shares slump under $3 to the new all time low of $2.93, before recovering slightly to $2.96. That was down 7c, or 2.3%.
News of the legal action comes a couple of weeks before the federal government is expected to reveal its preferred tender for a $10 billion-plus national broadband network.
More than $13 billion has been wiped from Telstra’s market value since it was excluded from the tender for the national broadband network (NBN) in early December.
The company’s shares had fallen from around $4.30 to $3.55 in the wake of that decision.
They then struggled back to around $3.78 at the time of the interim profit announcement, before plunging this week to $2.99.
The departure of controversial CEO, Sol Trujillo was confirmed at the profit announcement and it can be strongly argued that much of the fall since late February was as much a recognition that the American had made Telstra into a strong performer on a global comparison, even as he, the board and the Americans he imported antagonised many in the investment and political communities.
There’s as much a recognition that the Telco will miss Trujillo’s strong driven leadership as any disquiet about the national broadband network (NBN).
Telstra said yesterday the dispute at the back of the latest action from the ACCC was old.
Telstra said the ACCC’s move was an attempt to pave the way for further regulatory "shackles” on the firm.
The company’s head of communications, David Quilty, said the regulator ACCC action related to a small number of inadvertent process issues, which the company fixed a year ago, and was a "complete waste of court time and taxpayer money”.
"Since we fixed the problem a year ago, the ACCC has not once suggested it had problems with our new processes,” Mr Quilty said in a statement yesterday.
The Commission is taking action in the Federal Court in Melbourne against Telstra for allegedly contravening the Trade Practices Act by refusing other telecommunication companies access to the copper-wire at seven key telephone exchanges in Australia’s largest cities.
The Commission outlined its action in this statement (
,COMSEC).
Telstra allegedly claimed the exchanges were "capped” and had no spare capacity.
The Commission claims otherwise and that there was in fact capacity available, or that could have been made available on Telstra’s distribution frames.
It also alleges that Telstra engaged in misleading and deceptive conduct by posting on the website of Telstra’s wholesale division a document listing exchanges that were "capped”.
Under the standard access obligations, Telstra is legally required to provide access to its telephone exchanges for competitors wanting to install equipment so that they can provide voice and broadband services to customers.
“The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court in Melbourne against Telstra Corporation Limited for alleged contraventions of the Trade Practices Act 1974 (TPA) and the Telecommunications Act 1997 (Telco Act) in relation to its standard access obligations for the Unconditioned Local Loop Service (ULLS) and Line Sharing Service (LSS,” the ACCC said in its statement..
"The standard access obligations under section 152AR of the TPA require Telstra to permit interconnection of facilities to enable the supply of the ULLS and the LSS to access seekers, so they can provide voice and/or ADSL2+ broadband services to retail customers.
“In addition, Telstra must ensure that access seekers receive equivalent technical and operational quality and timing of interconnection to that which Telstra provides itself.
"The ACCC alleges that Telstra has refused access seeker requests for interconnection at seven key metropolitan exchanges by claiming that they were "capped".
“In particular, Telstra claimed that there was no capacity on the main distribution frames available for access seekers to interconnect their equipment to the copper wires running to customer homes.
“The ACCC alleges that there was capacity available, or that could have been made available, on Telstra’s main distribution frames.
"The ACCC also alleges that Telstra has breached the access regime in the Telco Act which requires Telstra to provide access to its facilities. Both the standard access obligations and the access regime in the Telco Act are conditions of Telstra’s carrier licence.
"It is also alleged that Telstra has engaged in misleading and deceptive conduct in contravention of section 52 of the TPA, by representing to access seekers individually and on lists of "capped" exchanges published on the Telstra Wholesale website.
"The ACCC is seeking declarations, pecuniary penalties and injunctions. This matter has been listed for a directions hearing in the Federal Court, Melbourne at 10.15 a.m. on Friday, 17 April 2009 before Justice Middleton."
The federal government will reveal its preferred bidder for the NBN project, possibly after April 4, when Prime Minister, Kevin Rudd, returns from two weeks in the US and Britain.
