An exclusive dealing notification lodged with the competition watchdog earlier this month requests permission "to offer consumers complimentary subscriptions to their Presto service, on the condition those consumers acquire wholesale and/or retail goods and services from Telstra Corporation Limited". The offer would last for two years from July 1, 2016.

A Presto spokesman told BusinessDay "we are currently working with Telstra Wholesale and there will be an offer in market, however timings and particulars are still being worked through so there's nothing further I can share at this time".

A Telstra spokesman confirmed on Wednesday evening the offer would not be available to retail customers.

"While we understand that Presto is looking at a potential offer with Telstra Wholesale, we wish to advise that there are no planned changes to the current retail offer for Telstra customers, which provides a $15 BigPond Movies voucher as well as access to three months' Presto Entertainment and three months' Stan upon activation of their Telstra TV," he said.

Telstra Wholesale sells telecommunications services to businesses and to telco re-sellers. This means a single Telstra Wholesale customer could have many employees who would also qualify for this Presto offer.

Foxtel's application suggests this offer would improve competition because it "may encourage competitors of Presto, Foxtel and Telstra, including other internet protocol subscription movie and TV service providers to offer their customers/subscribers access to similar benefits". It lists competitors as Fetch TV, Apple TV, NetFlix, Stan, iTunes, Bigpond, Quickflix Play and BBC iPlayer.

Presto is jointly owned by Seven West Media and Foxtel, which is jointly owned by Telstra and News Corp.

Telstra already offers its retail customers a free three-month trial of Presto and Stan. And Presto offers all newcomers a free one-month trial. Other subscription video on demand [SVOD] services such as Netflix and Stan also offer one-month free trials.

There is about 2.7 million active SVOD subscriptions and 1.9 million paying subscriptions in Australia, according to Telsyte.

"It is not uncommon for telcos to partner with SVOD service providers and creating customer stickiness. We don't think this will be a winner takes all market and Australians are increasingly drawn towards subscribing multiple SVOD services for unique content offerings," Telsyte analyst Alvin Lee.

"Most consumers have seen SVOD as an complimentary service to Foxtel or did not have Foxtel to begin with. We expect Pay TV subscription to grow at less than 4 per cent compound annual growth in the next 4 years."

He added that Pay TV revenues may decline from increased competition.

Total SVOD subscriber numbers would increase to about 4 million by 2019 as many households choose to have multiple subscriptions, according Telsyte's analysis.

Subscriber numbers were currently skewed towards Netflix, but its customer growth has slowed down following an initial spike. Stan has at least 500,000 active subscribers.

Stan is jointly owned by Fairfax Media and Channel Nine