Senior Telstra executive says he would not recommend shares to his mother
SYDNEY (AFP) - Debate over the future of Australia's largest telecommunications provider Telstra has become more acrimonious after a senior company executive said he would not even recommend shares in the company to his mother.
The government was reportedly livid after Phil Burgess, Telstra's regulatory and policy chief, said that regulation and administrative practices were destroying shareholder value in the majority state-owned company.
"Our view that shareholder value is being destroyed is echoed by an increasing number of analysts around the world," Burgess, who only recently arrived in Australia from the United States to take up the position, told The Age newspaper.
Asked whether he would invest in Telstra, Burgess said: "I'll keep that to myself but I sure wouldn't recommend it to my mother."
Prime Minister John Howard described Burgess' comments as foolish given the critical stage of development in Telstra, which is expected to be fully privatised in 2006 if controversial legislation is passed by parliament this year.
"If he did say that, I think it was a careless, foolish thing to say," Howard told ABC radio.
"His responsibility should be to promote the best interest of the company and I never think that throwaway lines are particularly smart in a situation like this."
Nor would the comments from Burgess, brought into Telstra by new chief executive and fellow American Solomon Trujillo, prompt the government to ease regulations which require Telstra to maintain basic services to all Australians, including those in remote and rural areas, Howard said.
"If he imagines that the government will change its attitude on regulation to protect the public and to promote competition by continuing to say those things, then he's wrong," he said.
Burgess' comments were later supported by a statement from Telstra which said the company would continue to work to benefit shareholders.
Burgess is one of the so-called 'three amigos' who were imported from the United States by Trujillo to run Telstra since he arrived on July 1 and have rankled officials ever since, leading The Age to describe the government's relationship with the corporate as "poisonous."
Burgess has told the government Telstra will pursue its case for less regulation aggressively and not behind doors.
"If you put a baby in a cage with a tiger and the tiger eats the baby, you shouldn't be surprised," Burgess told The Age.
As part of this strategy, Telstra plans to issue a letter to its 1.6 million shareholders, including 'mum and dad' investors, informing them of the costs of regulation so as to reignite "a campaign that had been shut down to allow for private discussions," he said.
Telstra will also challenge rulings from the nation's competition watchdog.
The government has said it will place reasonable regulation on Telstra designed to promote competition but that the telco had yet to identify the rules to which they objected.
"I would be pleased to see them settle down and do what they have come to do and run the operation side of Telstra," Communications Minister Helen Coonan told The Age.
The government is hoping for 32 billion dollars (24 billion US) from the full sale of Telstra but the share price has fallen since Trujillo warned of falling revenues last month, leading to fears the sell-off could face delays.
ED: Are the three amigos trying to artificially drive the Telstra share price down ??? Isn't it time that Telstra shareholders start asking Senior Liberals & National Ministers & MP's by phone, FAX or Email this question. Our advise: Do it soon before your shares are worth zip!