THE break up of Telstra may prove a boon to consumers but has incensed shareholders who had no inkling when they acquired shares in the privatisation that their investment would be split.

The sharemarket pronounced its early verdict on the plan for ”structural separation” of Telstra yesterday, driving down its share price by 4.3 per cent, or 14 cents, to $3.11 a share. Until now, Telstra has been able to use its market muscle to charge competitors for access to its cable networks.

This arrangement has angered Optus and other competitors who have long complained of high access prices, and led to some 150 access disputes which have poisoned relations between Government regulators and Telstra management for the past decade. Telstra’s gain, by charging for access to its networks, has meant higher prices for its competitors, and the structural separation should finally provide a level playing field.

For shareholders, though, there is little consolation. Some $1.75 billion was wiped from the value of the company’s shares yesterday as investors sold in anticipation of a hit to Telstra’s profits.

Given the poor performance of T2 and T3 – the last two tranches of Telstra to be privatised – structural separation added insult to injury.

The original float of Telstra in 1997 was priced at $3.60 a share. The euphoria of the dotcom boom sent the stock spiralling and underpinned the float of T2 at $7.80 a share. The stock price soon subsided and, at least in investor terms, missed the entire bull market before the government offloaded its remaining 50 per cent of the company at $3.30 a share.

There were complaints from shareholders yesterday that the Future Fund, which picked up a large chunk of Telstra shares via the T3 sale, had sold 34 per cent of its holding less than a month ago to institutional investors at $3.47 a share. It raised $2.37 billion and reduced its shareholding from 16.4 per cent to 10.9 per cent.

It is often the case that what is good for shareholders is bad for consumers, and vice-versa. In the case of Telstra and its prospective bust-up, consumers should benefit by lower access prices to Telstra’s monopoly network and, more so, by its likely participation in the national broadband network.