At Telstra's annual general meeting in Melbourne today, CEO David Thodey said the NBN Heads of Agreement deal with the government was good for shareholders because regulatory changes in the fixed-line access market made it difficult to compete, however many shareholders disagreed with the proposed $11 billion deal.
Thodey said it wasn't worth Telstra being in the wholesale fixed-line business in Australia anymore.
"While the number of wholesale services we provide to our resellers has remained pretty much constant over the last five years, our wholesale revenues have declined by 20 per cent. This has been a direct result of a reduction in wholesale prices by the regulator," he told shareholders today.
"We've seen an acceleration in this decline in wholesale revenues over the last 18 months as Telstra wholesale customers have accelerated this shift of their product mix to significantly lower cost services," he said.
"These regulatory changes have made it difficult for us to always forecast the future revenues of the company because we've been subject to regulatory change," he added. "One of the very important benefits of concluding the NBN negotiations is that we will be able to operate in an environment with greater regulatory certainty. In fact this is a precondition of doing this transaction."
But shareholders overwhelmingly voiced their disapproval of the $11 billion agreement reached between Telstra, NBN Co and the government that if completed will see the telco decommission its copper network, lease its ducts to NBN Co and move customers over to the NBN.
"I purchased Telstra shares because I thought — and I believed the government at the time, we had an honest government in those days — I bought the last mile. And now we have NBN stealing the last mile off us," one shareholder said.
"And I don't know whether the $11 billion is a fair price or not. I'm really not sure where we're going," he said, adding that Telstra should stay in the fixed line business in competition with the NBN to "send them broke".
"I think this company has to go it to the government. Why are we taking out copper when it was only put in a few years ago in Carlton?" another shareholder asked. "It's about time the government supported Telstra."
"We need a director who is capable and knows how to deal with blackmailing politicians and blackmailing [Communications Minister Stephen Conroy], an experienced union blackmailer," said another shareholder. "The reason our shareprice is so low is because of Senator Conroy and his cohorts".
Telstra chair Catherine Livingstone said the telco had negotiated "very hard" to protect the value for the shareholders.
One shareholder in favour, however, was shareholder activist and Crikey! founder Stephen Mayne.
"$11 billion of cash in after tax dollars is a good deal and we should encourage the board to conclude that deal and lock it in rather than taking potshots for the fact that we're not making a vigorous campaign," he said. "We will get to vote on this deal if it's no good. Let the board get on with locking in with what looks like a good deal."
Telstra chief financial officer Jon Stanhope told shareholders that the company was on track with its negotiations with the government for shareholders to vote on the deal midway next year.