Telstra is considering a $4.5 billion initial public offering or sale of its 50 per cent stake in Foxtel as the pay TV giant appoints News Corp Australia chief executive Peter Tonagh as Foxtel's new chief executive.

Mr Tonagh replaces Foxtel chief executive of nearly five years Richard Freudenstein at a critical moment for the cable and satellite giant, which Fairfax Media understands is considering radical options to tackle competition from cheaper video streaming services led by Netflix by becoming more of a technology-led company.

Foxtel is most popular for its coverage of sports codes including the NRL and the AFL, which it shares the rights to with Channel Nine and Channel Seven respectively. Credit:Will Russell

Rupert Murdoch's News Corp, which owns the other 50 per cent of Foxtel, could move to increase its stake in Foxtel as it has pre-emptive rights under the joint venture's shareholder agreement. Such a move would be likely to stoke the interest of the competition watchdog.

Sources say that Telstra has potential advisors working on a stock market float of all or part of its holding in Foxtel, which makes around $1 billion in profit, and media experts say could be worth between $8 billion and $9 billion in total.