Australian Prime Minister John Howard said he was delighted to finally win Senate support for Telstra's full privatization even as a key supporter warned yesterday that the telecoms giant's languishing share price means the sale is still no certainty.
Howard, who has pushed for full privatization since he won power almost a decade ago, praised his Senate colleagues for giving the A$30 billion (US$23 billion) sell-off the green light.
"I think we can look forward to a new era for telecommunications in Australia," the conservative prime minister said late on Wednesday at the UN in New York, where he is attending a summit of world leaders.
"We will now have a fully and freely operating Telstra when the process has been completed. That will provide a more competitive environment and when you have a more competitive environment, you have better outcomes for customers," Howard said.
Following its narrow 37 to 35 passage through the Senate, the sale legislation went to the lower House of Representatives yesterday where its approval was a formality in a chamber where the government has a comfortable majority.
After two partial floats in 1997 and 1999, the government's remaining stake in Telstra is 51.8 percent.
It had previously said it planned to proceed with the sale late next year but the timetable has been thrown into turmoil by recent falls in the company's share price.
Government budget papers assume the shares will be sold at A$5.20 but the stock closed at A$4.44 yesterday, up A$0.08 or 1.8 percent.
Barnaby Joyce, the rebel government senator who finally supported the sale after months of wavering, said up to A$5 billion would be lost if a "fire sale" of Australia's largest telecommunications company was approved.
"I think for all intents and purposes we're going to continue owning Telstra for a very long while," Joyce told Channel Nine yesterday.
The Labor Party opposition has for its part vowed to cancel the sale if it wins office, making the future of Telstra a potential election issue at the next national poll, which is likely to be held in 2007.
Labor communications spokesman Stephen Conroy has predicted privatization will result in poorer services, rising prices and the slashing of up to 14,000 Telstra jobs.
However, Howard said he believed public confidence in Telstra would pick up now that the uncertainty over the sale's passage was over and this in turn would pave the way for a share price revival.
"There will be an air of normalcy returning," Howard said. "People will see the inherent strengths of the company and they will understand the value of the guarantees that have been put in place."
However, CMC Markets analyst David Land said the problems at Telstra were deep-seated and there was little chance of sustained gains.
"It was pleasing for so many to see the share price rally following Senate approval for the privatization to go ahead but it really now puts the focus on the much more disturbing organizational problems that seem likely to plague the company for some time into the future," he said.
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