Australian telecommunications giant Telstra is set to consider a second revision of its $2.7bn (A$5bn) alliance with Richard Li's Hong Kong-based Pacific Century CyberWorks (PCCW) this week.

Since being announced in April, the deal - which would create one of the largest internet, data and business services groups in the pan-Asian region - has become increasingly unpopular with investors, analysts and the Australian government due to the slump in PCCW's share price.

And like many telecommunications companies worldwide, Telstra's own share price is being buffeted as it adjusts to technological change and the competition that has flowed from deregulation of Australia's telecommunications system.

The PCCW deal was marketed by Telstra chief executive Ziggy Switkowski as a way of elbowing into Asian markets, particularly China, but not everyone agrees with his strategy, the amount of money changing hands, or even his choice of partner.

Meanwhile speculation is growing over who will fill Telstra's three vacant board positions at the company's annual general meeting on November 17. Sam Chisholm, who headed Australia's Nine Network under Kerry Packer and BSkyB under Rupert Murdoch, is one of the most hotly tipped contenders. Packer and Murdoch together own the 50% of Australian pay-TV platform Foxtel, with Telstra holding the remaining 50%, and relations between the three partners have recently been strained.

  • Executives at Australia's second biggest telco, Cable & Wireless Optus have admitted that part of the company may be sold off to maximise shareholder value, a move which has often been publicly denied. The company's mobile phone business is the main focus of attention for potential investors but speculation also surrounds its pay-TV business with regional competitor Austar tipped as the most likely buyer.

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