TPG Telecom, Iinet Slump in Sydney on Speculation Telstra Will Cut Prices

TPG Telecom Ltd. and Iinet Ltd. led Australian telecommunications shares lower in Sydney trading on speculation Telstra Corp. may cut prices to win market share.

TPG fell 8.8 percent to A$1.45 at the 4:10 p.m. close in Sydney. Iinet shed 8.5 percent to A$2.60, Macquarie Telecom Group Ltd. fell 3.3 percent to A$5.51 and Amcom Telecommunications Ltd. lost 6.1 percent to 31 Australian cents.

Telstra, Australia’s largest phone company, yesterday cut its earnings forecast on plans to increase spending to win customers and stem market share losses. The company posted its first annual profit decline in four years.

“Everyone knows the only way Telstra is going to compete is on price,” said Theo Maas, who helps manage $4.5 billion of equities at Arnhem Investment Management in Sydney. “It’s not going to be good for the whole sector which is why you are seeing all the smaller guys down.”

Shares in Melbourne-based Telstra dropped 0.7 percent to A$2.92 after losing 9.5 percent of their value yesterday.

To contact the reporters for this story: Lisa Pham in Sydney at lpham14@bloomberg.net; Robert Fenner in Melbourne rfenner@bloomberg.net.

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