Limited lessons for Telstra in big AOL Time Warner losses

ABN Amro telecoms analyst Andrew Hines said the writedown had ``no implications at all for Telstra".

``The AOL Time Warner ... writedown is more about the fact that share prices at the time were over-inflated and it's got nothing to say about over paying or under paying for assets," Mr Hines said.

``Telstra may or may not buy media assets and whether that's good or not will depend on what price they pay at the time."

Telstra shares dipped to $4.99 yesterday but closed at $5, a drop of 21c, or 4 per cent, since the Federal Government announced sweeping changes to the corporation's pricing regime and the separation of the accounting of its wholesale and retail arms.

It's understood the Government will approach Telstra in the next week or so to discuss how the separation will be carried out.

There has been media speculation recently that Telstra could merge with a media company such as Kerry Packer's Channel Nine.

Some analysts have said that the AOL Time Warner result showed that merging Telstra with a media company would lead to financial disaster for the telecom.

But Mr Hines said there was no link between the two, since Telstra had not acquired any media assets.

He agreed the Government had been keen to defuse speculation that Telstra was interested in buying a television network.

However, he said: ``Telstra needs to get hold of content as part of its broadband strategy.

``Whether it's fixed or mobile assets, it needs content to deliver over a 3G platform or a DSL platform.

``Getting hold of content doesn't necessarily mean owning content. With these things it always comes down to price.

``If they believe they can buy some content and they believe that will be cheaper than playing the role of the content aggregator, then that's the right thing to do."

Mr Hines said Telstra was not close to acquiring Channel Nine or another media player.

``What they are doing is looking at all the various options they've got ahead of them for how they're going to get hold of content in the future," he said.

A company spokesman would not comment on speculation about the impact of AOL Time Warner's loss for Telstra.