Telstra has signalled that it will choose to fight the government's " Competition and Consumers Safeguards " bill - which will require it to separate it's wholesale and retail business.
The statement did not specify to what degree it would oppose this plan, but if it intends to go to court then it's shareholders are facing a long length of rocky road.
The previous Telstra management was both arrogant and intent on establishing a monopoly in the communications field. It felt it held all the aces because it owned the copper wire system connecting telephone exchanges to home and business phones. It engaged in a " Mexican standoff " with the government - and lost !
Telstra states that separating it's wholesale and retail business would cost between $ 500 million and $ 1.2 billion. That might be pocket money compared with the cost of going to all the court levels in an attempt to defeat the government on constitutional grounds.
Telstra is a big company, but fighting a government is not something to be undertaken lightly.
The government has deeper pockets - and has the ability to both tilt the playing field - and to move the goal posts if it chooses.
Perhaps Telstra management is simply sabre rattling to appease shareholder concerns. It also states that it will " continue negotiations in a positive and constructive manner ".
The share price has taken a hit because the market has a fair idea of who will win this battle.
If Telstra is serious about a court battle with the Federal government the word " suicide " comes to mind !
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