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Telstra writes to soothe shareholders

Telstra CEO Sol Trujillo and company chairman Donald McGauchie this morning wrote to Telstra shareholders to inform them of the situation now that Telstra has been kicked out of the National Broadband Network bid process.

Donald McGauchie
(Credit: Telstra)

The decision would have no impact on the company's overall business strategy, according to the duo. "Telstra's enviable financial position and strong fundamentals are no different today than they were last week before the expert panel made its decision," they said, insisting that there would be no change to the company's financial guidance.

The letter repeated Telstra's stance that it was the only company to have made a material financial commitment to building the network. "While Telstra disagrees with the decision and reserves its rights in respect of the matter, the company will move on," it said.

Trujillo and McGauchie drew attention to the company's Next G network which they said had "a clear roadmap to 42Mbps and beyond". They also pointed to the company's ADSL network, which they said reached 92 per cent of the population and the ADSL2+ network which served 82 per cent of the population.

The HFC cable network, available to 2.5 million capital city premises, had speeds of up to 17Mbps with 1.8 million achieving up to 30Mbps, the letter said. The speeds could increase dramatically, with the company able to roll out technology which will enable the cable network to deliver 100Mbps.

Telstra CEO Sol Trujillo
(Credit: Telstra)

Since the company's exit from the tender process on Monday, Telstra's shares have taken a battering, with billions being wiped off the company's market capitalisation. In the letter's last phrase, the duo tried to reassure shareholders that the company is still on an even keel.

"Regardless of what happens with the NBN, Telstra's transformation and strong financial position mean we will continue to deliver world-leading services to our customers and strong returns to our 1.4 million shareholders," they concluded.

Talkback 49 comments

    Ooops - what did we do....Ok now lets try and protect our positions, before the Anonymous -- 18/12/08

    This just smells of "trying to hold onto our positions" by Amigo Numero Uno and Cantankerous Chairman....

    They made a huge mistake by acting "above the law" and now millions of shareholders are going to suffer...

    The only ones who wont suffer is the Australian people as a whole...they wont have to put up with Telstra's tyranical strangelhold on communications technology any more....they will now have a choice!!!

    Well Done Sol and Don - enjoy your early reitrements!!!

    Get a grip! Anonymous -- 18/12/08 (in reply to #320119421)

    "They made a huge mistake by acting "above the law" ..."

    Above what law? There is no law that said anyone had to bid. There was no law that prevented Telstra or anyone writing a letter instead.

    Idiotic exaggerations and childish name-calling adds nothing to the debate.

    It is just an expression... Anonymous -- 18/12/08 (in reply to #320119437)

    When stating that they acted "above the law" is merely an expression....of course they havent acted unlawfully...it is merely a way of saying that they did not follow the rules...

    obviously you like to take everything litteraly...

    and obviously you are also upset because your Telstra shares are worth considerably less this week...

    Admit it - you are just as dissapointed as all of your other fellow telstra comrades and shareholders....I know if I were you I would be

    @It is just an expression... Anonymous -- 19/12/08 (in reply to #320119440)

    If you meant that it was non compliant with the RFP conditions, just say so.

    My message was not intended as support for Telstra. It was targetted purely at the stupidity of your post. You assumption-laden diatribe in response merely proves my point.

    Mature Anonymous -- 19/12/08 (in reply to #320119529)

    Of course an adult like response is to label someone stupid...

    Very Mature.

    @It is just an expression... Anonymous -- 19/12/08 (in reply to #320119529)

    You are right mate, the guy that wrote in "Oops what did we do, is an absolute twit. It's probably Mel Sommersberg, and pure stupidity was the exact description of the **** I would like to put it a little more rudely, but I think you have covered it in an adequate manner !

    @@it is just an expression Anonymous -- 06/01/09 (in reply to #320119529)

    Are you my manager?

    She often regurgitates verbose sentences in an attempt to sound intelligent.

    OP, I agree - we can only see something good from all this. If Telstra are right, and they continue to build the in their current direction, and we see a new NBN we might finally see competition.

    How at all..is this bad??

    Well Telstra has consistently breached Competition Law (TPA) Graeme Harrison (prof at-symbol post.harvard.edu) -- 19/12/08 (in reply to #320119437)

    The general comment of 'acting above the law' is applicable, as Telstra has consistently acted in clear contravention of Australia's competition law (TPA) and in contravention of the spirit of prior rulings against Telstra. And it has been persistent in these actions, ever since the three amigos appeared on the scene. The corporate philosophy was to breach the competition laws, wait until a competitor was sufficiently incensed and then wait until a court action was filed, defend their actions in court and begrudgingly concede Telstra's position just prior to the end of the case against it, or in final negotiations with the regulator. It was always done with the maximum amount of foot-dragging.

    The most obvious case was Telstra's across-all-clients discounting of retail prices to below its own wholesale prices, seeking to send a clear message that re-sellers could be 'stuffed' and were not welcome. Given that it was clear government policy, and the result of earlier TPA actions that forced the opening up of Telstra's monopoly to include a role for resellers, that action was deemed by most to be illegal. In each case, the regulator's actions to remedy the situation occurred well after Telstra's actions had caused damages to the other participants in the industry (as intended).

    Another egregious example (but not illegal per se) was Telstra's refusal to roll-out faster broadband that was already installed in many exchanges, until such time as the government gave certain anti-competitive assurances to Telstra to maintain Telstra's monopolistic dominance in the area. That was arguably mis-use of market force.

    So, in summary, I think it is reasonable for a commentator to suggest that Telstra had been both acting above the law (in certain specific respects) and TRYING to act above the law, by playing 'hardball in the extreme' to have government policy fashioned in a way that Telstra wanted. And I think Sol, Burgess et al misread the Australian psyche, in that in the US, such hardball actions could be seen as furthering free-market rights, whereas in an Australian setting, the 'bull in the china shop' actions were actually entrenching the public view as to why the competitiveness of the Australian economy should not be at the behest of some bullies at the head of a particular telco. In other words, misuse of monopoly powers in Australia is more likely to raise concerns about allowing such monopolies to continue without adding competitive pressures.

    The NBN tender exclusion can be seen as merely the last in a long-line of poor (but consistent) strategies being played out by Telstra's top management. They were always unlikely to 'force' the government into a complete backdown, so why persist with the strategy after it had failed to work with the Howard and now Rudd governments. Telstra should have simply played a status-quo strategy, of seeking to retain 80+% market share in all NEW areas of telephony, knowing that no 'trump move' would ever wipe out the other 20%, but that, if Telstra kept quiet about it, the economies of scale would always be on Telstra's side... and if they simply kept participating, the government would always front-up with the extra cash to retain the Universal Service Obligation, putting a fairly-calculated amount into Telstra's coffers to keep the rural areas almost-fully-abreast of city consumers. And using that money to keep a superior rural network would mean that no competitors would ever have good mobile coverage in the bush, keeping a useful 'point of distinction' to Telstra. And yes, competitors would do some cherry-picking of city-based customers... but that was always better than being excluded from the game outright, due to showing an inability to understand what was meant by to 'play fair'.

    Well Telstra has consistently breached Competition Law (TPA) Anonymous -- 19/12/08 (in reply to #320119555)

    What a load of absolute crap that was. (Was that you Mel)

    Re Telstra Breaches - Put forward counter-examples! Graeme Harrison (prof at-symbol post.harvard.edu) -- 19/12/08 (in reply to #320119587)

    'Anonymous' has suggested my earlier (long) post was "absolute crap". But he does not claim any of the facts cited are incorrect, preferring to simply disagree with the analysis. Rather than ignore the facts, why not explain how lowering retail prices to below wholesale is NOT a repudiation of the regulator-imposed obligation to deal fairly with re-sellers? If I recall correctly, the regulator sided with me on this one, and required Telstra cease undermining the resellers in this way. Perhaps you can explain why, in Telstra's perspective, the regulator kept getting it so wrong; and how both the Howard and then Rudd government got it so wrong...

    As to whether I am a 'Mel', I can only say that, unlike 'Anonymous' hiding behind an undisclosed identity, my real name is 'Graeme Harrison' and you really can send me an email at 'prof at-symbol post.harvard.edu' and I will reply to any sensible emails to prove my existence. [The only reason why I put 'at-symbol' in long-hand rather than '@' is to avoid spammer email address searching bots.]

    @Re Telstra Breaches - Put forward counter-examples! Anonymous -- 20/12/08 (in reply to #320119592)

    Regarding your first example, the competition notice lasted, if I remember correctly, for over a year. Had they been in the right, the ACCC and Telstra's competitors could have claimed hundreds of millions of dollars. All they had to do was mount a convincing case in court and regardless of what Telstra did subsequently, they would have won. They didn't. The case fell apart. The ACCC just left the competition notice hanging over Telstra's head - after all, it cost the ACCC nothing to do so. As T3 loomed, Telstra had to have the matter closed one way or another. The ACCC eventually dropped the case after Telstra paid a token few million dollars so they could do so and save face.

    It was the *retail* sale of ADSL 2 that Telstra held back. Would you please explain what law requires a company to retail any product? ISPs were selling their own ADSL2 - the problem Telstra had was being forced to compete with themselves via the wholesale deals at a dictated price. If I was running a business, I'd have a problem with that too.

    Telstra supporter even confirms foot-dragging Graeme Harrison (prof at-symbol post.harvard.edu) -- 23/12/08 (in reply to #320119650)

    Dear 'Anonymous' Telstra-supporter,
    Thank you for coming back to debate the facts rather than being dismissive.

    As to Telstra dealing unfairly with resellers, you confirm that the ACCC did find against Telstra. [The fact that you know how many months the competition notice was in place (and who could have won what if a damages claim had been made) makes me think you are a bit closer to the action than simply being an dispassionate observer?]

    The fact that Telstra was playing hard-ball through the courts and only settled with the national regulator when Telstra needed to sell T3 confirms Telstra's foot-dragging on compliance issues.

    In your final para you ask me to cite on what legal grounds Telstra should be compelled to offer a new service (ADSL2) it had available for market but was refusing to release.

    But what I said was "Another egregious example (but not illegal per se) was...." So I never claimed it was illegal per se.

    However, I did go on to note that the refusal to turn on ADSL2 "until such time as the government gave certain anti-competitive assurances to Telstra to maintain Telstra's monopolistic dominance in the area. That was arguably mis-use of market force." I still hold that it was a mis-use of market force. Under the TPA it is illegal to misuse market force in any way to seek to exclude others' access to that market... and that is what Telstra was seeking to do. Now (arguably) as the discussion was with the government, it is not the same as conspiring between oligopolists to exclude other players... but the action was nevertheless seeking to exclude others from market access.

    Spot the spy. Sydney Lawrence -- 18/12/08 (in reply to #320119421)

    The Australian people might not have Telstra to deal with but lets hope they don't have to suffer an NBN under the control of a company with close ties to a Chinese spy network.

    Here it comes... Anonymous -- 18/12/08 (in reply to #320119442)

    Let the Telstra sponsored xenophobic waffle commence!

    Remember Sydney, the Australian defence force uses Optus satellites already.

    Besides...Optus may not win yet. Axia might pull through. It's all idle speculation until January.

    The other chance Anonymous -- 18/12/08 (in reply to #320119444)

    Or Acacia?

    When all else fails, play the parnoia card Anonymous -- 18/12/08 (in reply to #320119442)

    What a pathetic opinion / argument

    LOL! Your rants are amusing! Anonymous -- 18/12/08 (in reply to #320119442)

    Sydney, your rants are amusing in light of the fact that even _you_ have asked for heads to roll at Telstra for the monumental stuff up that is now reflected in the value of Telstra shares!

    (Should I link your post on Telstra's NWAT site?)

    Please, keep up the commentary - we all need a good laugh :-)

    LOL! Your rants are amusing ! Anonymous -- 19/12/08 (in reply to #320119475)

    Don't worry too much about idiots like this Sydney. It's either Mel Sommersberg in on of his anonymous moments, or some cretin that does not use his brain.

    If the alternative is the likes of you, Sydney ... Anonymous -- 18/12/08 (in reply to #320119442)

    I'd reather suffer the outcomes of every "Sydney-supported-Telstra" imperitive than have to deal with the likes of you, Sydney!

    Seriously, get a grip, Sydney! It's only _your_ gambled money (Telstra shares) that is suffering a loss, not the values of the citizens of this fantastic country, Australia :-)

    Spot the spy Anonymous -- 19/12/08 (in reply to #320119442)

    Sydney - I thought you were going on the Queen Mary? Sooner the better I say. I am however surprised that you have decided to spend your money with a foreign company and to travel outside Australian waters, considering your rampant xenophobia. I've heard Wogga is particularly pleasant at this time of year. why aren't you supporting the Australian economy my friend?

    Go to Rio. Sydney Lawrence -- 19/12/08 (in reply to #320119566)

    Been there, done that but never been to Rio. Life's short why not join me?

    Spot the spy Anonymous -- 19/12/08 (in reply to #320119442)

    And lets hope we don't have suffer too much more diatribe, from the likes of Graeme Harrison - Proessor of Absolute Garbage.

    Graeme Harrison and his $2 PHD. Sydney Lawrence -- 20/12/08 (in reply to #320119588)

    Please give the man his full title. Professor of Absolute, Complete and Total Garbage.

    @Graeme Harrison and his $2 PHD Anonymous -- 20/12/08 (in reply to #320119645)

    I always wondered what would happen if you replied to those spam emails offering PhDs. Now I know. :-)

    Play the Ball, not the Man! Graeme Harrison (prof at-symbol post.harvard.edu) -- 23/12/08 (in reply to #320119693)

    'Anonymous' and 'Sydney Lawrence' prove why anonymous posts should be reserved only for whistle-blowers. They use anonymous names and then defame the person, rather than putting forward valid counter-arguments. Play the ball, not the man! Ad hominem attacks prove that you cannot counter the logic, so you attack the messenger. If this is what Telstra's PR has sunk to, there is a message for all of us.
    I have at least provided my proper email address, why don't you two do the same, to level the playing field. It would also short-circuit the requirement for someone defamed by you to obtain your contact details. My alma mater kindly on-forwards my emails via a server actually located within Harvard University... and which is clearly part of the Harvard,edu domain. You would both know that you don't get that type of service when buying degrees off the internet... so cease the defamation and keep your posts on the subject.

    agreed, joe -- 23/12/08 (in reply to #320119847)

    but a bit off topic, but may I ask, graeme, what are you a professor of? just for my own curiosity if nothing else,

    I am glad someone agrees with me Mel Sommersberg -- 28/12/08 (in reply to #320119847)

    Graeme, I've been suggesting for a long time that ZDNet attach member registration to these forums. Since both already exist here and have for, again a long time, it should be very easy to do.

    However ZDNet have replied to me on each occasion claiming that they will suffer a loss of participation if they did this. I'm not one for telling other people how to run their websites though I do believe that if people had to be members to post there would be far less diatribe, personal attacks and impersonation of other users and more intelligence.

    Whilst you and I have differed in opinion at times I still appreciate your comments as they, borrowing a phrase, "play the ball, not the man". The same goes for Sydney Lawrence, whose input I also enjoy reading.

    This anonymous troll who seems to stick like a limpet has been flamebaiting here for at least three weeks and it seems that ZDNet is either unwilling to or incapable of controlling him. Whilst this obviously promotes more participation it degrades the quality of the forums and makes those who make an effort to engage in mutual respect wonder whether it is worth the effort or not.

    It brings me back to a thought I had years ago where there should be a licence to use the Internet. It would go a long way to stopping people jumping from forum to forum under the spineless cover of anonymity throwing rabbit punches at whoever they please.

    Again I do appreciate all of the quality posts here that attack arguments rather than people and in the spirit of fair play I wish everyone a happy new year for 2009. :-)

    Ooops - what did we do....Ok now lets try and protect our positions, before the Anonymous -- 19/12/08 (in reply to #320119421)

    You probably posted this, without even knowing what the contents of the letter to shareholders said, you twit. Get a grip on yourself, but not where your hand obviously is !

    Time to Fall on your sword! Anonymous -- 18/12/08

    Nice one SOL, Sometimes I think you actually believe you own spin!

    You took a massive gamble, it didn't pay off, now your attempts to pretend everything is hunky dory appear even more arrogant that your blundered bid.

    We are on the cusp of a massive resession, thousands are being laid off in this industry, Telstra workers have never been so disheartened.

    Why haven't you resigned yet.

    Here Here... Anonymous -- 18/12/08 (in reply to #320119435)

    Well put - Sol just go...

    and Chairman Don - thankfully you are gone next year....why are you so angry and arrogant all the time - start treating journos and your shareholders with some respect...

    Not only blind. Sydney Lawrence -- 18/12/08 (in reply to #320119441)

    Yes Sol you have done a poor job.

    Telstra has come through the world financial calamity the best of any Australian company and today is rising strongly in a falling market.
    Get a grip Anon.

    "Telstra has come through the world financial calamity"? Mark in Sydney -- 18/12/08 (in reply to #320119443)

    Firstly you imply that the world financial calamity is behind us!, and then you suggest Telstra is rising strongly! - And it's Anon who needs to get a grip?

    I think he's bang on the money!

    I'm not sure where you get your market data from Lawrence, but I suggest you spend more time reading articles and less time writing comments.

    Sydney's Back Pocket? Anonymous -- 18/12/08 (in reply to #320119443)

    Yes of course Sydney..

    "Rising strongly in a falling market"

    Yes I also call loosing billions dollars off the copmany's value in a week...as rising strongly!

    (Not too mention the amount of job losses...FACT)

    ROFL! Anonymous -- 18/12/08 (in reply to #320119443)

    OMG!

    Sydney, did you loose so much from Telstra's (approx) $10 Bn share crash that you have to now expand, further, upon your usual Telstra-instantiated reality?

    My sincerest pity is extended to you and the family that must obviously suffer with your continued company :-(

    ROFL Anonymous -- 19/12/08 (in reply to #320119481)

    You wish, you poor mind twisted sod. At lease Sydney puts forward much more sensible comments than you have. But I guess common sense is something you obviously lack, and are just another one of the vitriolic anti-Telstra brigade.
    Or Mel Sommersberg doing one of his anonymous posts.

    Sydney Lawrence go away! Phil Burgess' skinny brother -- 18/12/08

    IS it ok if I report Sydney's rantings by hitting hte offensive comment button. Oh my god Huawei is Chinese! Take a look inside your PC and your mobile its all made there too, do you think they have put a tap into every mobile and PC and are intercepting all your data. Go spend your pensioner bonus on more Telstra shares Syd, they are worth about the same as 8 years ago, good investment knobhead! Please go away Sydney please, and yes I do have to retort to name calling against you cause you apply no logic to anything.

    yes Anonymous -- 18/12/08 (in reply to #320119463)

    My thoughts exactly.

    He applies no logic but twisted biased logic.

    We are talking about Mel [Brad, Lord Watchdog] Sommersberg aren't we?

    @Sydney Lawrence go away Anonymous -- 19/12/08 (in reply to #320119463)

    Phil Burgess skinny brother, you are another cretin that simply hates to see Telstra do well. For what reason I am not sure, but it is probably because of one of the three following deficiencies (A) You are a cretin (B) You are a cretin (C) You are a cretin. It's you that needs to go away, and the further the better.

    Capitalism Mel Sommersberg -- 18/12/08

    "The HFC cable network, available to 2.5 million capital city premises, had speeds of up to 17Mbps with 1.8 million achieving up to 30Mbps, the letter said. The speeds could increase dramatically, with the company able to roll out technology which will enable the cable network to deliver 100Mbps."

    All this does is confirm Telstra's agenda of maximising profits for shareholders and not having the slightest interest in serving the nation as a whole.

    One day I do hope that Telstra's upper eshelon realise that there are parts of Australia outside Sydney and Melbourne.

    Actually, Telstra's view is Regional is a Gov problem, Not Telstra's Anonymous -- 19/12/08 (in reply to #320119494)

    Actually, Telstra's view is Regional is a Gov problem, Not Telstra's...

    If anyone doubts this assertion then take a bloody good look at Telstra's, err, "NBN plan", as submitted!

    Regional and Rural was NOT a part of Telstra's plan!

    Crikey, even Newcastle, NSW was not a part of the Telstra NBN plan (the largest non-capital city in Australia!)!

    The year finishes on a high Anonymous -- 19/12/08

    I for one am extremely happy to see that Telstra is finishing the year on a sour note. Its workers are on strike and it has monumentally misjudged its dealings with the government. Misfortune falls on those that treat others (customers, government, shareholders and employees) with contempt. Let's hope 2009 brings similar bad luck to to Telstra. Happy Christmas!

    The year finishes on a high Sydney Mike -- 19/12/08 (in reply to #320119527)

    Another absolutely stupid and biased opinion from some nut case, that hates Telstra. Get a life you lot, because whether you believe it or not Telstra will see it's way through this maze of competitive crap, that you all think they are not going to succeed against. Fancy wishing bad luck on a company that has so many Australians employed, and so many Australian households on their shareholders register. You ought to be ashamed of yourself for such anti Australian comments. (Was that you Mel ?)

    Sydney Mike Reply Anonymous -- 20/12/08 (in reply to #320119589)

    Mate - business is business, so I couldn't give two sh*ts about whether or not it's an Australian company. Wake up, this is a global economy. If you hadn't noticed, you have a bunch of Americans running Telstra and Optus may be a Singaporean-owned company but almost solely employs Australians in its Sydney office. So at the end of the day, your backward, almost xenophobic take on my comments are outdated and definitely perochial. Of course I don't want to see mass layoffs of Australian workers, but I do want to see a company like Telstra humbled on account of its uncompetitive, arrogant and often revolting behaviour. For the record, I am not ashamed of myself in the slightest and I am not Mel (although I agree with most of his views)

    Sydney Mike Reply Sydney Mike -- 20/12/08 (in reply to #320119646)

    Yeah thanks Mel Fan , (If in fact you are not Mel) but your first sentence said it al -l "couldn't give two sh*ts about whether or not it's an Australian company.

    I won't dignify your reply with any more response to it, you cretin.

    another shinying insight into the mind of telstra fan boi's sydney mike, your a tool - Joe -- 20/12/08 (in reply to #320119656)

    rawww! rawwww! me love telstra!! rawwww! telstra australian, australian gooood! telstra say optus tries to hurt us! me no likey optus!!! telstra say next G network is super dooper, me never leave central city but tesltra say i need pay lots more for coverage should me ever leave city... rawwwww! me name sydney mike and me love telstra and believe all they say, becasue telstra gooood

    @ joe Anonymous -- 22/12/08 (in reply to #320119659)

    LOL - not the most mature post but definitely amusing, no matter which side of the argument you're on

    another shinying insight into the mind of telstra fan boi's Sysney Mike -- 22/12/08 (in reply to #320119659)

    My God, I hope they don't let you out of your cage

    Sydney Mike again Anonymous -- 05/01/09 (in reply to #320119656)

    Sydney Mike, I agree with Joe. you are a tool...

    My God! - What unapproachable arrogance! Robert More -- 08/01/09

    Does "Sol" really think that 82% of Australia's population has access to the ADSL2+ network, or is it 82% of the suburb that he lives in?

    Get real Telstra, you have absolutely no idea about the "real" Australia! Get out of your air-conditioned offices, limousines, and Lear jets, and see what life is like in the suburbs, where the Telstra subscribers. live.

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