Communications Minister Stephen Conroy has denied proposed laws to split Telstra would erode the telco's shareholder value, believing the incumbent was doing that on its own.
Speaking at the launch of NBN Co's mainland test sites in Sydney, Conroy faced a barrage of questions over Telstra, which threatened to derail the purpose of the launch.
It came after Telstra sent a letter to shareholders [PDF] that said the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill was "likely to destroy shareholder value and makes an agreement with NBN Co and the Government harder to achieve."
The Bill proposed, among other things, a wholesale-retail split of Telstra - with the threat of being left out of next-generation wireless spectrum auctions if it didn't comply.
Conroy was not buying the telco's argument that the Bill would erode shareholder value.
"That might be true if their share price hadn't fallen below $3 before the Bill was issued," Conroy said.
Telstra shares fell below $3 for only the second time since listing on the sharemarket late last month.
The carrier also recently reported declining PSTN revenues at rates even they had not anticipated.
Telstra's letter to shareholders also voiced clear displeasure in the Government leaving open the possibility of NBN Co having some form of retail operation if they acquired it in the course of trying to build the wholesale network.
This was spelled out in separate legislation to the split bill, currently drafted for public review.
"Although this is only draft legislation, it raises for the first time the prospect of NBN Co becoming a Government-funded retailer, not just a wholesale network provider," Telstra said.
"We are very concerned about this potential change in the Government's position. If enacted, we would need to factor this into the financial consideration required to achieve an agreement that is in the company's and your best interests."
Conroy would not be drawn on whether the shareholder letter posed difficulties in ongoing negotiations between NBN Co and Telstra.
He repeatedly said the legislation was a draft and could change as it progressed.