Optus chairman Paul O’Sullivan has called for Telstra to be broken up.

Mr O’Sullivan wants to see responsibility for Telstra’s copper network separated from the rest of its business, under a model similar to that adopted in the UK with BT Group.

His argument centres around the $8.4 billion Telstra is forecast to receive from taxpayers through the NBN in the next five years.

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He said the extra cash injection from the government gave the telco an unfair advantage over its rivals.

“Clearly Telstra is going to have a pretty rich and steady flow of cash coming its way,” he said in a speech in Sydney.

“And in fairness, it is going to have a commercial incentive to use that cash… they are going to want to use that money to bolster their market position, to cross-subsidise and indeed to entrench their position.”

And he said the sum paid to Telstra could actually increase under the Abbott government’s fibre-to-the-node plans, which continue to utilise Telstra’s copper network.

The changes to the NBN, he said, added to the case for a Telstra break-up.

“We need to break up Telstra,” he said.

“If Telstra is going to have a key role to play in the NBN because we are now dependent on their copper in order to get from the node to the home, then there is a huge conflict of interest if they are owning and operating that network.”

Mr O’Sullivan said about 70 per cent of the profits generated by Australia’s telecommunications industry currently went to Telstra, and the additional money from the NBN would allow it to lift its market share further and stifle competition.

“Competition in telecommunications in Australia is under more threat than at any time since it was introduced in 1992,” he said.

And that would ultimately mean poorer service and higher prices for consumers, he said.

“The average person in the street is about to be delivered a new industry structure that has huge potential to stifle competition and inevitably give rise to inferior and more expensive communications services in the future,” he said.

He also said Telstra had been able to extract favourable terms for its copper network due to the federal government’s desire to keep the NBN on track.

“Governments feel themselves under enormous pressure to provide the incentives for Telstra to play along,” he said.

*The reporter owns shares in Telstra.