Australia’s troubled Telstra launches 1 billion dollar 3G network

SYDNEY (AFP) – Australian telecoms giant Telstra has launched a new 3G mobile broadband network amid a blaze of publicity as it moved to bolster investor confidence ahead of a troubled share sale.

The company’s chief executive, Sol Trujillo, claimed the world’s geographically largest national 3G network would offer wireless mobile and Internet access to 98 percent of the people of sparsely-populated Australia.

The “turbo-charged” service, with its beefed up third generation (3G) mobile technology, was five times faster than any other network in the country and would offer users 12 channels of television, sport and movie downloads.

“You see this is the day … that life in Australia will be changed forever,” boasted Trujillo of the network, put in place with an investment of one billion dollars (746 million US) in over just 10 months.

“This is an exciting day for all Australians, no matter where they live and work,” said Trujillo, who is at the centre of an increasingly bitter war of words over his management style with the Australian government, which holds a 51.8 percent stake in the telecoms firm.

Telstra’s 420,000 3G customers will be able to download material at an average speed of 550 kilobytes to 1.5 megabytes per second (Mbps), with peak network speeds reaching up to 3.6Mbps, increasing to 14.4Mbps early next year, he said.

“From today, almost every Australian is going to have access to nationwide, very high speed mobiles and internet,” Telstra group’s managing director for consumer and small business David Moffatt said.

But the glitzy investor briefing at which the plans were unveiled was rudely interrupted when a fire sprinkler activated, sending hundreds of analysts scrambling for cover.

As Telstra touted its new mobile broadband network, analysts poured more cold water on the plan, noting that Australia lags far behind in its fixed broadband infrastructure.

“I’m very sorry but this is a load of rubbish, it’s just another network — nobody’s going to use it for watching television services,” media analyst Paul Budde of the website Budd.com said.

Aequs Securities head of institutional investment, Ric Klusman, said Telstra is stalling in rolling out a new high speed ADSL2+ fixed broadband network and would remain vulnerable to competition.

“Telstra is the most expensive so why do you need it,” he said of customers’ reaction to cheaper fixed broadband options.

The network launch came ahead of the government’s unveiling on Monday of the prospectus for the strife-ridden October 23 sale of eight billion dollars (6.06 billion US) worth of stock, or one third of its holding, in Telstra.

Telstra and its majority shareholder have been locked in an acrimonious public row, raising fears it could scare off investors.

Simmering tensions boiled over last month when Trujillo opposed the government’s bid to appoint a close Howard associate to the board.

Prime Minister John Howard and Treasurer Peter Costello last week questioned Trujillo’s multi-million dollar pay packet, while furious backbench MP’s demanded the controversial US executive’s sacking.

Telstra’s share price has tumbled more than 30 percent since Trujillo took over in July 2005 and annual profits are down more than 25 percent, a reality that forced Canberra to scrap plans to fully privatise the firm.

The firm on Friday also slashed growth forecasts to June 2010 by about half to 2.0 to 2.5 percent a year from the five percent forecast when Telstra launched its five-year restructuring programme in November 2006.

But it forecast 1.5 to 2.0 percent revenue growth in 2007, with earnings before interest and tax to rise 2.0 to 4.0 percent.

Telstra closed up 2.68 percent Friday, its highest level in two months, on less-than-expected cuts to earnings forecasts to June 2010, analysts said.

Source- http://news.yahoo.com