Fed: Alston orders inquiry into splitting Telstra

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Fed: Alston orders inquiry into splitting Telstra

CANBERRA, Dec 11 AAP - Communications Minister Richard Alston has ordered an inquiryinto splitting Telstra in two and selling the government's stake in the telco giant'sservices business.

Labor said the move was a first step towards selling off the profitable services arm,while keeping Telstra's network in public ownership.

But the coalition said the inquiry, to be conducted by the House of RepresentativesCommunications Committee, was sparked by a Labor proposal to split the company and thegovernment was opposed to separation.

The committee will canvass the economic and social impact of splitting Telstra's networkfrom its other businesses, such as mobile and internet activities.

The inquiry will also consider reducing the Commonwealth's shareholding in non-networkbusinesses.

Labor said the change of tack was a sign the government was considering alternativesto a straight sale of its remaining 50.1 per cent stake in Telstra, which faces oppositionin the Senate.

Opposition communications spokesman Lindsay Tanner said he was pleased the governmentwas considering splitting Telstra, which Labor proposed in its telecommunications policyearlier this year.

"They have been bucketing us for considering it and now they're considering it themselves,"

he told AAP.

"I suspect it reflects a combination of National Party pressure and recognition thatthey have got trouble getting the sale of Telstra through the Senate."

A spokesman for Communications Minister Richard Alston said the minister had ordered the inquiry.

But he said the minister's letter to committee chair and Liberal MP Christopher Pynesaid the government clearly opposed structural separation.

The spokesman said it was too early to speculate on any future change in coalitionpolicy, given it was still working on its response to the Estens inquiry into regionalservices.

"This is an inquiry that's just been announced so you can't make that judgment," he said.

"The question of further privatisation awaits our response to the Estens inquiry andbeyond that anything is hypothetical."

The government hoped to have its response to Estens by Christmas.

AAP kmh/kjp/drp/sb

KEYWORD: TELSTRA