Telstra Disappoints with Net No-Show

Dominant Australian telecommunications carrier Telstra has failed to live up to
expectations that it would float some of its Internet businesses Wednesday
while announcing its half-yearly financial results.

The results themselves were respectable enough, with earnings before
interest and tax rising by 9.3 percent on year-ago figures to AUS$3.3
billion (US$2 billion), and a profit after tax of AUS$2.1 billion (US$1.3
billion).

Speculation in most major media centred around the theoretical “CB
Holdings,” which was supposed to be the name of a holding company Telstra
would set up under the stewardship of Ted Pretty, MD of the company’s
convergent business division. The common wisdom was that Telstra needed to
be able to trade scrip in Internet alliance deals, which it is prevented
from doing by the Australian Government’s 50.1 percent ownership.

There was no mention of this in the announcement, beyond an opaque reference
to a “review of the structure of our businesses and integrated organisation
to ensure the best business architectures for Telstra in this modern era.”

Instead, the carrier stuck to confirming leaked details about a cost
reduction program aimed at curbing AUS$650 million (US$393 million) in
expenses. This program would involve sacking 10,000 staff plus 220 of the
1000 “senior management positions” within the company.

Telstra’s share price dropped 50 cents to AUS$8.21 by the end of Wednesday,
although it was still higher than before this week’s rumour-inspired rally
started.

The only surprise was that Telstra planned to deliver broadband services to
90 percent of the Australian population over two years using asymmetric
digital subscriber line (ADSL). This would complement the carrier’s billion
dollar existing investment in a national broadband cable, in which it has a
duopoly with Cable & Wireless Optus,
and extensive satellite capacity.

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