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Telstra cops flak over Indonesia interest

Telstra cops flak over Indonesia interest

Telstra is fending off more criticism after an unconfirmed report that it is considering launching a $3 billion bid for Indonesia’s third largest mobile phone company, Excelcomindo Pratama.

Earlier this week, The Australian reported that Telstra was planning the bid in an attempt to expand in mobiles offshore.

The news follows Telstra's failure last week to finalise a deal merging its Sensis directories unit with the John Fairfax group. The deal was opposed by board members.

Telco analysts and politicians alike are claiming that Telstra should focus its energies on its main business in Australia. “I find it puzzling that Telstra is doing this,” telecommunications researcher, Paul Budde, said. “And it’s sending shockwaves through the industry.”

“Telstra has had some 25 deals in other countries over the decades, and not one of them has been successful.”

The timing for such a bid was not good, Budde claimed, although he was quick to state that this had nothing to do with the viability of Excelcomindo Pratama.

China Telecom and Telecom Malaysia are also thought to be making a bid for the company.

“Telstra needs to have its own house in order,” he said.

Budde said that the telco should look to Australia for investment opportunities, as this was where it earned its money.

“They make all their profits in Australia,” he said. “It’s obviously a lucrative market for them. They should invest in Australia. By improving their services, they’ll improve their revenue and profits.”

The shadow minister for communications, Lindsay Tanner, claimed that Telstra just wouldn't learn.

"Not content with losing several billions of dollars in Asia over the past few years, [they are] now proposing to spend around $3 billion buying an Indonesian phone company," he said.

“Telstra management appears to want to do everything other than run an Australian telecommunications company."

Tanner said that Telstra was probably the world's most financially health telco, despite its losses in the past.

"It's strength comes from its Australia telecommunications operations," he said.

The move to expand offshore is seen as an attempt to curb a decline in sales as the telco loses its market share to chief competitor, Singapore Telecommunications, which owns Optus.

Telstra has declined to comment on the bid.

Immediately following the unconfirmed newspaper report, shares in Telstra Corp. fell six cents to a seven-month low of $4.66.


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