From
http://www.businessspectator.com.au/...F?OpenDocument
Telstra Corp Ltd holds the majority of the bargaining power as the
government attempts to split its retail and wholesale businesses, according
to RSB telco analyst Ian Martin.
Under the plan, the government will force Telstra to conduct its network
operations and wholesale functions at arm's length from the rest of the
company if it does not voluntarily separate.
The government is also seeking to prevent Telstra from acquiring additional
wireless broadband spectrum - and request that it divest its hybrid fibre
coaxial cable network and 50 per cent interest in subscriber television
network Foxtel - if it fails to co-operate.
Many shareholders and related representative groups have come out in
opposition to the proposal, some labelling it "draconian".
Speaking to ABC TV's Inside Business, Mr Martin said the description was
appropriate if the legislation went through in its current form.
"But I think you need to see the legislation as part of the bargaining
process," Mr Martin said.
"Most of the bargaining power remains with Telstra because they have got a
going concern. they've got the customers, they've got the traffic," he said.
RSB has Telstra's share price target at $4.40, which is at the upper end of
analyst estimates, and remains well above its last trading price of $3.11.
Mr Martin said the price target was based on an earnings estimate just above
12 times next year's forecasts, adding that the range of share price targets
in the market stemmed from the uncertainty created by the split plan.
"I don't think the range of possibilities is as wide as implied in the
current share price and some of the share price targets," Mr Martin said.
"I think it's the uncertainty that's factoring into the prices here, not the
outcome itself."
Telstra still holds the bargaining power 
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