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Last Updated: Wednesday, 21 December 2005, 11:10 GMT
Telstra loses phone market ruling
Young children crowd round a pay phone
Telstra is looking at how to best meet changing user needs
Telstra, Australia's largest telecoms firm, has lost a key regulatory ruling that is likely to hurt its earnings and may delay the sale of its shares.

Australia's competition office rejected plans to alter what Telstra charges firms for access to its phone network.

As a result, Telstra has put a large expansion project on hold, and said regulatory decisions could cost it 850m Australian dollars ($625m).

The government is planning to sell its 52% Telstra stake late next year.


"This will simply mean more delays," said telecoms analyst Paul Budde.

"When you have this hanging over your head how can you do things like due diligence? Nobody will sign off on this when it is still up in air," he said.

Telstra had been hoping to redefine how it charges other phone firms for using the wires that run from its phone exchanges to customers homes.

The company's shares rose 1.3% in Australia on Wednesday after it said it would delay spending AUS$10bn on upgrading its phone network.

Telstra is in the process of cutting costs and refocusing its business as it tries to counter declining revenues from landline operations, and concentrate on broadband and mobile phone services.

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