News: TLS UPDATE 2-Australia's Telstra axes $4.4 bln fundraising plan after state partner's veto

• Telstra drops plan to securitise receivables from govt network
• Govt network to end Telstra's wholesale monopoly by about 2020
• Telstra shares, trading ex-dividend, dive to 5-yr low

(Adds quotes from Telstra spokesman and Nbn co; updates shares)

Telstra Corp (TLS), Australia's largest telecoms operator, dropped a plan to raise as much as A$5.5 billion ($4.4 billion) through an income securitisation deal after a government-backed business partner rejected the move, sending its shares tumbling.

Telstra said two weeks ago it was considering doing a deal with investors by which it will get upfront a chunk of the A$1 billion per year that it receives from state-owned National Broadband Network (NBN), which rents ducts and other infrastructure from Telstra.

But on Wednesday Telstra said in a statement it was scrapping the plan as the government network refused consent. "Without that, we can't proceed," Telstra spokesman Jon Court told Reuters, adding though, that it will continue to receive the income from the state network.

The scrapping of the fundraising plan comes at a delicate time for Telstra, which built Australia's copper-wire phone network and is now seeking upfront cash to spend on growth businesses as its traditional revenue streams decline.

It was not immediately clear why the government network would need to approve Telstra's securitisation plan, details of which are not known.

The state network, though, is usurping Telstra's status as Australia's monopoly telecoms wholesaler, and will replace Telstra's copper lines with fibre-optic by about 2020.

Telstra warned earlier this month the network would hit its earnings by about A$3 billion a year from its scheduled completion in 2021. It said it would cut its dividend by 30 percent in fiscal 2018, partly because of the negative impact of the state network.

Nbn co, which runs the government network, said in a statement Telstra's fundraising plan was not "in the best interests of the network. It said the risk was difficult to quantify, but "NBN believes that the monetisation may create long-term impediments to future decision-making capability of NBN."

Telstra shares sank as much as 8.6 percent on Wednesday to their lowest since mid-2012, before ending down 6.3 percent. The stock, once coveted for its high yield, was already under pressure because it traded ex-dividend on Wednesday.

"I thought it was a good plan effectively bringing forward elements of an uncertain revenue into today," said Hugh Dive, Chief Investment Officer at Atlas Funds Management, which does not own Telstra shares.

"It was a bit of a carrot and that carrot's gone and so Telstra investors right now are back to the base business."