In a statement to the Australian Stock Exchange (ASX) on Monday, Australia's largest telco lowered its earnings forecasts for 2006/7 following the competition watchdog's decision to reduce the amount Telstra can charge third party broadband suppliers for access to some of its exchanges.
Telstra's revenue growth expectations are now 1.5 to two percent, compared to between two and 2.5 percent, which was the figure presented in the company's annual results earlier this month. Earnings before interest and tax are now expected to be between two and four percent, compared to between four and six percent previously.
The new guidance figures were expected after the Australian Competition and Consumer Commission (ACCC) ruled that Telstra could only charge one particular third party AU$17.70 per month for access to certain copper lines running from its suburban exchanges. This compared with the previous minimum access price for all third parties of AU$22 per month.
"Telstra notes that since Friday 11 August 2006, when the ACCC first issued an interim determination at AU$17.70 per month in Band 2, the ACCC has issues several other interim determinations at the same level and Telstra expects the same outcome in the remaining interim determinations," the Telstra statement said.
The pricing guidance set by the ACCC affects access to the copper lines that run directly into customers' premises from one of Telstra's suburban (Band 2) exchanges. For Band 1 (inner metropolitan), the ACCC set a price of AU$7.20 and for Band 3 (rural) a price of AU$34.20.
Something smells off.
Given the fact that Telstra have almost *no* customers on ULLs (most of them are on Telstra Wholesale DSL or SSS (Spectrum Sharing) - how can the price change affect their bottom line that much?
ULL revenue = 0 customers x $17.70 = 0
ULL revenue = 0 customers x $22 = 0