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Game up or game on for Telstra?

As the nation crawls towards Election Day, Prime Minister Gillard’s chances of winning another term don’t appear to be improving. The Coalition has made no secret of what it thinks of Labor policies; particularly the National Broadband Network (NBN), the carbon tax, and the minerals resource rent tax (MRRT). Should there be a change in government in September there is little doubt the Coalition will try and alter these policies to some degree.

The Australian newspaper has reported on an interview it conducted with Telstra (ASX: TLS) CEO David Thodey, detailing the CEO’s view that the $11 billion agreement signed in relation to the NBN would not be renegotiated should there be a change of government. Thodey was open to discussing logistical aspects of the roll-out but not the $11 billion agreed upon, suggesting that there is little room for the Coalition to meaningfully stop the NBN now that major contracts have been signed.

Any changes to the NBN will of course affect Telstra’s competitors, including Optus parent Singtel (ASX: SGT), iiNet (ASX: IIN), and TPG Telecom (ASX: TPM). Given that the NBN should create a more level playing field, in most cases by improving access costs, investors could expect any Coalition back-tracking to be a negative for Telstra’s competitors. However, perhaps providing some solace, a recent iiNet presentation at an Investor Conference stated that:

“The NBN (in whatever form) will be better for customers, better for iiNet and better for Australia.”

Foolish takeaway

Governments have the power to significantly alter the value of companies through regulation and policy, so it would be Foolish to not stop and consider how a Coalition government may alter the investment landscape for certain industries. As things currently stand, potential alterations to the NBN and MRRT don’t look as though they would significant effect Australian firms; however a wind-back of the carbon tax could provide a boost to a number of companies and industries.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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