So the government wants to split Telstra into wholesale and retail but shareholders are crying “unfair” and fair enough too.

Firstly, I put this concept of separation to Telstra over 13 years ago – only to see them kill the idea - so what’s new?

Secondly, the concept put to Telstra at that time recommended that it sell its downstream (retail) operations. Based on valuations at the time, Telstra might reasonably have expected to gain about $15b that wasn’t in the balance sheet. If we do a similar exercise today (rather that just “lift and separate”) then it might be reasonable to expect that Telstra might raise anywhere between $20b to $30b from the sale of its retail networks.

These funds could then be used in a number of ways:

* Return the funds to shareholders in compensation for the sale of assets (thus stopping their cries of “unfair”);
* Use the funds to buy back shares from shareholders;
* Use the funds to make other acquisitions in non-contentious markets.

The question then arises as to the appropriate status of Telstra (Wholesale) as an effective wholesale monopoly in the market: or is it the perfect platform to roll out the government’s high-speed fibre network?

The government is certainly on the right track.