TELSTRA'S big shareholders have again gone on the attack over Federal Government plans to break up the telco, warning such actions may be unconstitutional.
Anton Tagliaferro from Investors Mutual, which represents more than 500 million Telstra shares, said the board's policy of cooperating civilly with the Government did not seem to be working.
Telstra faces the structural separation of its wholesale and retail businesses - by either voluntary or forcible means - under the Government's plans.
Some have complained the move will bite into Telstra's earnings.
Mr Tagliaferro said the move may be unconstitutional, and said a vote of shareholders would need to be taken to approve any major asset sell-off.
"There is also the view constitutionally whether these sort of things can be imposed, whether the company has to go to shareholder vote actually to get these things approved,'' Mr Tagliaferro said.
"This is a listed company, this is not communist Russia. You cannot force a company to sell assets.
"What is being proposed is unprecedented in this country,'' he said.
He said the Telstra board should consider a tougher line with the Government.
"Perhaps they should look at the other methods, which perhaps may be more effective, which is lobbying the 1.4 million shareholders, you know, to actually get the Government to change what is an absolute joke of legislation and new regulations,'' Mr Tagliaferro said.
"We want Telstra board to make sure they don't bend over to what is a terrible proposal from the Government,'' he said.
Last week some of Telstra's major shareholders wrote to the company condemning the Government's plans, and urging the board to rally investors to petition the Government over them.
Mr Tagliaferro dismissed claims from Communications Minister Stephen Conroy that the new rules could be a win-win for Telstra shareholders and all Australians.
"I would say that a win-win is not quite right, in fact it is almost misleading,'' Mr Tagliaferro said.
He said it was unfair for various governments to sell parts of Telstra, only to change the rules after the sale.
