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Australians say Telstra stake sale unlikely soon

The Australian government has said for the first time that its majority stake in telecoms giant Telstra is unlikely to be put up for public sale before late next year.

Finance Minister Nick Minchin said unresolved regulatory issues at Telstra were impeding the government's plans to fully privatize Telstra by selling its remaining 51.8 percent stake in the company.

"It's making a retail offer this year, and therefore in this term of government, less likely," Minchin told yesterday's Australian Financial Review.

PREPARATIONS ONGOING

"My task is to ensure that we are in a position to have a retail offer if we want to pursue that option, so we're continuing with our preparations but I'd have to say, with the continuing uncertainty over those critical issues for Telstra, then a retail offering is looking less likely," Minchin said.

Minchin, who insisted in mid-May that plans for a public offering in October or November were on track, told the Financial Review if the sale did not proceed this year, then it could even be ruled out for early next year because that would coincide with a general election.

Telstra's share price has plunged more than 25 percent in the past year, delaying the privatization plans of a government determined not to proceed with a "fire sale" of the asset.

The company has publicly campaigned without success for the government to provide it with greater regulatory protection before it spends more than A$3 billion (US$2.2 billion) unrolling a new broadband network.

HOWARD ADAMANT

Prime Minister John Howard last week said he would not be blackmailed by Telstra on the issue and criticized the firm's controversial US chief Sol Trujillo for making light of its share price freefall.

If the sale does go ahead, it would be the third tranche of Telstra shares sold by the government. The first two, known as T1 and T2, were carried out in 1997 and 1999.

The T2 shares were offered at A$7.40 each and there are now doubts whether Australian investors, who have since seen the price plummet to about A$3.70 dollars, will be lining up to participate in T3.

The company's shares were down A$0.01 at A$3.67 around midday yesterday.
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