In a research note released yesterday, the financial analyst group weighed up the costs Telstra shareholders would wear should the various scenarios tabled in the Federal Government's upcoming regulatory review come into effect.
Macquarie estimated functional separation would cost Telstra shareholders between six and 33 cents per share - the lower figure representing a scenario in which regulatory changes are made without a National Broadband Network (NBN) being completed by the Government, the latter including the competitive effect of an NBN.
Even without an NBN, Macquarie said, the "implementation costs" of functional separation - the setting up of two new divisions, new systems and new brands - would be significant.
Competing with an NBN, meanwhile, would result in Telstra earning five per cent lower margins on its fixed line products, "stemming from greater equivalence of inputs for access seekers versus Telstra's retail division, as well as the impact of having to provide additional wholesale services that would bring fresh competition to the market place."
A proposed ACCC review of declared fixed line services, meanwhile, would be likely to lower wholesale network costs and represent a hit of four to 10 cents per share to Telstra shareholders.
Macquarie said it is "almost certain" wholesale line rental and local calling services will fall under the ACCC's proposal to shift from a Retail Minus pricing methodology to a cost-based methodology.
"This is an input that Telstra can be very sensitive to as it has the potential to impact all of its PSTN revenues," the research note states.
The introduction of potential retail price controls, particularly on fixed-to-mobile calls, would cost Telstra around $118 million a year and its shareholders between two and 10 cents per share.
The proposed scrapping of the Universal Service Obligation, through which Telstra has been subsidised to provide services in regional Australia, would cost the carrier around $52 million a year, or two cents per share.
While a "BT-like" functional separation of Telstra represented the highest short-term cost, Macquarie said a forced divestment of Telstra's HFC cable infrastructure represents "the biggest risk" from the Federal Government's regulatory review.
"Strategically, the forced divestment of Telstra's HFC cable network would be the most significant regulatory reform," the analyst group said.
"It could limit Telstra's competitive advantage in broadband, and more importantly limit any feasible competitive response it might have to the build out of an FTTH-based NBN platform in this footprint.
"Telstra may still be considering competing with the NBN in metro areas using this [HFC cable] network, and accessing the NBN is less profitable regional areas - similar to its Plan B against an FTTN network. Accordingly, we would expect Telstra to fight any forced HFC divestment aggressively."
Macquarie said Telstra's share price "continues to underperform" and that the 18 per cent discount it is trading at compared to its peers is "unlikely to contract" post the NBN announcement.
"Telstra is currently trading at an 18 per cent discount to the Australian All Industrials index, an historical low. This in part reflects uncertainty over the government's NBN intentions and the upcoming regulatory review," the research note stated.