Australian Broadband Network Concerns Telstra
Telstra shares have dropped to their all time low of $3.01 due to shareholder concerns over the company’s continued profitability. The Federal Government’s proposal for a national broadband network has put into doubt whether or not the company could survive with such huge competition. The stock price had fallen 27% since Telstra was first excluded from the Government’s broadband plan. Government officials have vowed to not allow the company to jeopardize the $10 billion plan. The government hopes to reduce the stranglehold Telstra has on the market in Australia. Telstra recently had to borrow $300 billion from Chinese banks in order to have money to continue operations.
It does not seem likely that the stock prices will return to their previous levels if the federal plan pushes forward. Telstra being excluded from the national broadband network would make it very hard for the company to compete in the market. If Telstra wants to maintain its status as a viable company it must negotiate with the federal government and reach some sort of agreement that will allow them to participate in the national network. Luckily for Tesla, the broadband project will take years to complete, so the company has until then to think of new ways to become profitable.