Hopefully these are overreactions but these are some excerpts from http://www.theaustralian.news.com.au/business/story/0,28124,24807992-36418,00.html:
Mr Gupta said if Telstra were to lose 20 per cent of its fixed revenues, the impact on earnings before interest, tax, depreciation and amortisation would be minus-6 to minus-8 per cent, or 60c per share.
And his is not the most bearish report, with at least two analysts warning for the past six months about the risks for Telstra of not being involved in, or losing the tender.
JP Morgan analyst Laurent Horrut slashed his price target for Telstra from $4.23 to $3.55.
“We believe there is no possibility for the Government to re-engage Telstra in the negotiation as part of the ongoing NBN process,” Mr Horrut said.
“We expect the Government to proceed without Telstra and the panel to recommend one or several bids to the Government by end of January.
“Beyond the technicalities of the process, we believe this decision reveals more fundamentally a growing level of frustration from the Government with Telstra's very public demands and ultimatum for regulatory concessions.
“(This) was the rather spectacular regulatory backlash we had warned investors against for the past six months.
“Our $3.55 risk-weighted price target reflects our view on the new probability of the various potential scenarios.”
Mr Horrut said the possibility of a value-accretive negotiated outcome for Telstra has “entirely vanished” and the risk of a regulated scenario involving operational, or structural, separation has dramatically increased today.
Citi analysts have also been warnings against the dire market reaction to Telstra missing out on the network, slashing its target price form $4.20 to $3.40.
“This reflects $13 billion of value erosion, which assumes lower retail average revenues and loss of wholesale and retail share (including government telco contracts),” Citi analyst Phil Campbell said
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