Telstra has acknowledged the company lost about $10 billion from the Telstra Network Transaction as part of its $1.6 billion acquisition of the struggling telecommunications company in 2017.
The telco’s Chief Executive Officer Michael O’Brien said on Monday that the net loss from the deal is now $10.7 billion.
That includes $3 billion from Telstra’s share price drop in 2017, which wiped $3.6 trillion off Telstra shareholders’ portfolios, and $1 billion from losses on the company’s credit default swap contracts.
O’Briens announcement comes as the federal government prepares to hand down a new Telstra bill that will reduce Telstra employees’ compensation by up to half.
The bill is set to pass the Senate later this month and is expected to be tabled in the House of Representatives next month.
OBrien said Telstra is now taking a “hard look” at its options.
“I think we’ve got a pretty good picture of what we can achieve,” O’Brian said.
“We’re not going to get back as much money as we lost and we are trying to make sure that we’re making sure that as a company that is in the same position we’re in that we are taking a hard look at what options we have and what our options are.”
O’Brion said Telstom is now looking at a number of options to recover from the loss.
Telstra said it is still considering what options it will pursue in order to offset the $10bn.
OBSERVATION AT THE TEN YEARS OF TESLA-TRANSMISSION The deal is set for a $3,500 fee for Telstra customers to access its online shopping and online billing platform, and is set in stone until 2020.
Telcos are also required to set up a “backstop” system for Telstamans that would stop customers from cancelling their telco service if they decide they no longer want it.
Overnight pricing will be based on the price of a typical monthly telephone bill, which will increase with the number of calls and SMS messages that consumers send or receive.
Telstar will continue to offer Telstra services for the first 10 years of the deal, and will continue with the Telstar mobile phone service and Telstra Enterprise broadband services.
In 2019, Telstra will provide access to the Telco Network Transaction for the same fee as it did in 2017 and will have to provide an equal level of support to Telstra and its network operators.
OPPOSITION TO THE DEAL AT THE VOTE-BEHIND-THE-SCREEN The Australian Communications Consumer Action Party (ACCCAP), which represents consumer advocates, said Telstar should have waited a decade for the Telcom transaction to come into force.
“The Telstra-Tasmanian deal is a huge corporate welfare scam,” said ACCAP’s national communications spokesman, Sam Bower.
“It’s not a price competition that’s fair or fair to consumers, and that’s why consumers should demand that the Telus-TASMANIAN deal be cancelled immediately.”
The ACCAP says Telstra was able to gain control of the Telcos through a process called “bundling,” where the telco acquired Telstra assets and used them to acquire new assets.
Under that process, Telstams network operators were able to access Telstra networks for the next decade at a fixed price.
“This is a giant corporate welfare scheme, which gives Telstra a monopoly on telecommunications services,” said Bower, adding that he is concerned the deal will lead to a return of the old Telstra network and Telstames legacy business model.
“If the Telfer network is gone, it’s gone forever,” he said.
The ABC has contacted Telstra for comment.
Telster said it expects the cost of the transaction to be passed on to its shareholders.
“As a result of the acquisition of Telstra, we have to reinvest a portion of our revenue in our businesses,” Telstra spokesperson Sarah Kelleher said.
However, she said the telcos’ net profit and revenue was now expected to exceed $8.2 billion, which is expected in 2020.
OBBOTTED AT TESLAS AT A GLANCE In 2017, Telster’s shares traded at $18.90.
That dropped to $19.50 by 2021.
In 2017-18, Telstar lost more than $3bn.
The year before, Telstone’s shares were trading at $6.50.
In 2018, Telus’s shares fell to $17.80.
In 2016-17, Telco’s shares dropped to just under $15.
Telstel’s shares rose to $14.60.
Telco lost more in 2017-2018 than it made in the previous three years.
Telnet had its