SNAP ANALYSIS-Telstra faces tougher competition post-split

MELBOURNE, Sept 15 - The Australian government plans to force a break-up of dominant telecommunications company Telstra Corp Ltd to drive competition and further modernise Australia's telecoms industry. The move follows the government's decision last year to dump Telstra from bidding to build a new high-speed broadband network and instead launch government-led plans for a $37 billion network.

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* Telstra will have to operate its wholesale business at arm's length from the rest of the company, so it may have to drop the price it charges wholesale customers for access to its network. Its customers include Singtel's Optus , Telecom Corp of New Zealand's AAPT.

The former government monopoly dominates the telecoms industry and has constantly been challenged by rivals for stalling on providing access and for charging unfair access fees.

The move follows the path taken in Britain and New Zealand, where BT Group and Telecom Corp were forced to separate their network and retail businesses.

* The break-up of Telstra could spur an upgrade in services on a new fibre network, getting away from Telstra's copper network, which is the backbone of most services in Australia.

* Telstra could decide to sell its 50 percent holding in Australia's main pay-TV operator, Foxtel. The government said if Telstra remains vertically integrated, keeps its hybrid fibre coaxial (HFC) cable network and holds its stake in Foxtel, it will be blocked from buying any more spectrum for advanced wireless broadband.

* A sale of the Foxtel stake could stir merger activity in the media industry, where Kerry Stokes' Seven Network and James Packer's Consolidated Media Holdings are vying to grow in pay-TV.