Telstra to unload assets

Gov't rules on company, commercial TV licenses

SYDNEY — The Australian government has nixed proposals from the competition regulator forcing leading telco Telstra to sell its cable network and its 50% stake in dominant pay TV platform Foxtel.

The Australian Competition and Consumer Commission recommendation that the government consider issuing new terrestrial commercial TV licenses earlier than 2006 was also nixed.

Communications Minister Richard Alston said there was a potential risk that taxpayers would have to compensate Telstra’s 1.8 million shareholders if the company were forced to get out of pay TV.

He said the government was committed to a moratorium on new TV licenses until Dec. 6 2006 to give broadcasters breathing space while spending up to $A1 billion ($650 million) to convert to digital.

The ACCC was asked to report on the wider competition effects of the pay TV market after approving a content merger between Foxtel and cabler Optus last November.

Telstra has adamantly refused to sell its stake, although News Corp. and Publishing and Broadcasting Ltd., which each hold 25% of Foxtel, have said they are keen to increase their equity.