Broadcast: 02/09/2005
PM takes on Telstra executives
Reporter: Greg Jennett
MAXINE MCKEW: The Prime Minister has admonished senior Telstra
executive Phil Burgess for claiming government regulation is
destroying shareholder value in the company. The high-powered
American manager has warned that Telstra's share price could plunge
below $3 - a statement John Howard dismisses as careless and foolish.
>From Canberra, Greg Jennett reports.
GREG JENNETT: So much for Helen Coonan's order to stop complaining.
Senior Telstra executive Phil Burgess will hear nothing of it. The
newly arrived American has upped the ante in his attack on government
regulation, telling newspapers the regime is, "destroying shareholder
value in Telstra", and citing the view of analysts that, "the share
price could go as low as $2.87". A massive discount on its current
price of around $4.60. And to emphasis his point, Mr Burgess says he
wouldn't recommend investing in Telstra to his mother.
JOHN HOWARD, PRIME MINISTER: If he did say that, I think it was a
careless, foolish thing to say.
INTERVIEWER: The intent of it, though, is clear.
JOHN HOWARD: His responsibility should be to promote the best
interests of the company.
PETER COSTELLO, TREASURER: What is the interest of the shareholders?
The interest of the shareholders is a price which is rising. And
they've got to take their decisions accordingly to preserve value for
their shareholders.
KIM BEAZLEY, FEDERAL OPPOSITION LEADER: What Telstra is saying in the
clearest possible way, is that when we're privatised, you can forget
all these obligations you might try to impose on us in relation to
the bush. We will do what we can do for our shareholders.
GREG JENNETT: But the new Sol Trujillo management team at Telstra
will not be deterred. The company is planning a mail-out to all
shareholders, highlighting what Phil Burgess calls "intrusive and
draconian and punitive regulators" thwarting revenue growth.
JOHN HOWARD: For somebody in that position to be talking in that
fashion is not helpful to the company and I'm frankly surprised that
he continues to do it. 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.
GREG JENNETT: With its hopes pinned on a $30-billion-plus return from
its shares, the jawboning by the American team at the helm is
seriously unsettling to a government used to a compliant Telstra
management. Defending its conduct today, a company spokesman says it
wants the focus to be on policy, not personalities, and that it's a
debate in the best interests of all parties. Legislation clearing the
way for full privatisation is due to be introduced in parliament next
week. Greg Jennett, Lateline.
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