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Telecom And Telstra – Comparing Strategies

Telecom And Telstra – Comparing Strategies

Comment by Paul Budde

Last week has been quite a shocker for Telecom, and the company needs to pool its resources and put in a major effort if it’s going to keep the company on the right course.

Late last year in Australia, Telstra also went through a rollercoaster ride, and was handed a similar punishment to the one the share market delivered to Telecom last week.

Telstra took the attitude ‘over my dead body’ and declared war on the government and the regulator, in an effort to retain its monopoly. Telecom, however, is facing up to reality – it seems to have more of an understanding than Telstra does that its future lies ahead and not in the past.

It’s still too early to conclude that Telecom is going to come up with bold new restructuring policies and strategies, but I am cautiously optimistic that the company will move in this direction. In any case, I am prepared to forecast (hope) that it will do so.

It seems to me that Telecom has accepted the government’s regulations and the indications are that it will work with these new policies. In my various media analyses I have mentioned that Telecom does have that can-do attitude, and that, if it is willing to put its full weight behind this, it can succeed.

And, unlike other analysts, I sincerely hope that the company will hold onto its energetic and passionate CEO – the company needs a person like Teresa Gattung to move forward.

It will also be interesting to see the position that Telstra will now take regarding trans-Tasman telecommunications regulatory harmonisation. The New Zealand Government has certainly put the country right at the forefront of international developments in this market and harmonisation now would mean that Telstra would have to implement far-reaching changes to its behaviour and attitudes in this market.

Structural separation is now certainly on the agenda in New Zealand, while Telstra continues to fight against operational separation. I would also not be surprised if Telecom were to take the future into its own hands and start looking at what it can do, rather than waiting for government-initiated solutions.

I will certainly be cheering Telecom on – to be bold and show that it can win in a competitive environment as opposed to a monopoly. This certainly will not be easy – in fact, it will be decidedly risky – but the approach being taken by Telstra, of fighting the future and protecting the past, is certainly not the right way forward.

It may be able to get a few more years out of such a policy, but this will only put it further behind in the long run.

BuddeComm operates the largest, continually updated, telecommunications research service on the Net

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