Telstra fights $300 million fine in Federal court, Shares fall: Economy Roundup

Telco giant Telstra will attempt to convince the Federal Court today it should not be fined $300 million for allegedly engaging in misleading and deceptive conduct and therefore breaching the conditions of its license as a carrier.

The Australian Competition and Consumer Commission began the legal action against Telstra in March 2008, saying the company denied other wholesale customers, such as Optus and iiNet, space on equipment in seven important exchange locations.

“At a time of rapid growth in broadband uptake, we made some mistakes evaluating requests from wholesale customers wanting access to our exchanges. We changed our processes two years ago to ensure it wouldn’t happen again,” Telstra spokesman Andrew Butcher said in a statement.

“I don’t want to make excuses for what happened, but the mistakes we made involved less than 1% of all requests. Still, 99% or so isn’t good enough.”

Telstra admitted it had failed to comply under the Telecommunications Act, but it is now attempting to argue it should not face the massive fine. The Telecommunications Act specifies penalties of $10 million per breach, with 30 being alleged against Telstra. It is unknown how many the company is attempting to dispute.

A new CommSec report reveals New South Wales is the state with the poorest performing economy, but that a growing population together with a housing shortage could open up avenues for growth.

The Australian Capital Territory was revealed as the best economy in the country, with Western Australia taking second place with strong growth in the resources and construction sectors.

South Australia is currently recording the strongest population growth in over 30 years, putting it in third place, followed by Victoria, Northern Territory and Tasmania respectively. Queensland came in seventh.

“NSW still occupies the bottom ranking of the economic performance table, with the economy still lacking a key growth driver,” CommSec chief economist Craig James said in a statement.

“But population growth is well above longer-term averages and there is a shortage of housing, so that potentially opens up an avenue of growth in coming quarters,” he said.
“The stronger pace of population growth may serve to provide fresh momentum for the economy, but the risk is that workers will be drawn away to the resources states.”

James also added that Western Australia has some of the best prospects due to the mining boom, and that Queensland is expected to see a recovery as global economic conditions improve.

Shares lower after Wall Street disappointment

The Australian sharemarket has opened lower today following a disappointing end to the week on Wall Street, during which the Dow Jones broke the symbolic 11,000 point barrier.

The Australian sharemarket was down 65 points or 1.32% to 4919.1 at 12.00 AEST, well-below the 5,000 point barrier broken last week. The Australian dollar has also dropped to $US92 following the news that Goldman Sachs is currently being investigated for fraud regarding its actions leading up the financial crisis.

ANZ shares lost 1.5% to $25.30, with Commonwealth Bank shares also losing 1.1% to $59.17. NAB lost 1.3% to $28, as Westpac lost 1.2% to $27.83.

As reported by the Australian Financial Review, pharmaceutical company Sigma is now facing an investigation from the Australian Taxation Office regarding its multi-million loyalty scheme.

It is understood the ATO discovered the value of goods exchanged through the benefits program while undertaking a routine audit.

Meanwhile, the Australian Competition and Consumer Commission has said it will give mining giants Rio Tinto and BHP Billiton more time to respond to questions on their proposed merger of iron ore operations in Western Australia.

“The timeline was suspended to allow the parties additional time to respond,” a spokesperson has told Reuters. The new timeline will provide both companies a deadline of May 27, extended from April 28.

Also in the mining industry, OneSteel, the country’s second largest steel manufacturer, has shut its doors at Whyalla blast furnace due to extended repairs.

The company said the halt would not affect its half-year earnings. It comes after it shut the furnace last week due to a separate incident.

ANZ completes RBS acquisition

ANZ Banking Group has now completed its acquisition of the Taiwanese businesses of the Royal Bank of Scotland, including the retail, wealth, commercial and institutional businesses of the RBS.

“The Private Bank acquisition gives ANZ a private banking team in Taiwan to develop ANZ’s private banking business in Greater China, adding operations in the Taiwanese cities of Taipei, Taichung and Kaohsiung,” ANZ said in a statement.

Macarthur Coal has said its major shareholder, CITIC Resources Australia, is currently undecided on whether it should back a revised $4.1 billion takeover offer from US company Peabody Energy.

“Based on the current limited information available to CITIC about Peabody’s further proposal, CITIC is not in a position to make an informed assessment enabling it to make a decision on whether or not it could support Peabody’s further proposal,” Macarthur said in a statement to the Australian Securities Exchange (ASX).

“CITIC remains supportive of the rationale for the Noble/Gloucester transactions, which CITIC believes is in line with the vision to build Macarthur into a leading independent coal company.”

Overseas, treasury secretary Timothy Geithner has said he is confident the White House will be able to work with Republicans in Congress in order to pass a financial regulation bill.

“I am very confident that we’re going to have the votes for a strong package of financial reforms that will bring derivative markets out of the dark, help protect the taxpayers from having to fund future bailouts and trying to make sure we’re getting Americans some basic protection against fraud and abuse,” Geithner told NBC’s Meet the Press.

The Republican Party has attacked a bill passed by the Senate Banking Committee, saying it would put the Government’s hand in private industry and would provide further bailouts.