Australia's government yesterday achieved a decade-old dream and privatized telco behemoth Telstra with a US$12 billion share offer that was snapped up by enthusiastic investors.
Shares in the third tranche of the sale rose nine percent against the first instalment price when they debuted on the Australian Stock Exchange as Canberra shed 35 percent of its 51.8 percent stake in the formerly state-owned firm.
But Telstra's overall share price fell 3.2 percent as investors sold off their existing stock to buy into the government's new offer, which will leave it with a 17 percent state in Telstra.
The new shares opened their listing at A$2.11 and closed at a high of A$2.18, compared to the US$2 first instalment price paid by small or retail investors and the A$2.10 paid by institutions.
"[Telstra] finally has fulfilled its ambition to be more truly independent of government and no longer part of a government enterprise," said BBY analyst Mark McDonnell told the Australian Broadcasting Corporation.
Australian Finance Minister Nick Minchin hailed the success of the sale saying that the government could now play its role of regulator in the telco industry without fear of a conflict of interest.
Telstra would also be better off now that the government was no longer a substantial shareholder, he said.
"It has a been a huge load on the company for too long and at last the company is free of that weight upon it of the government's majority shareholding," he said.
"So in my view all Telstra shareholders will be much better off," the minister added.
The opening price for the new offer was a nice reward for long-suffering shareholders in Telstra who have seen the value of the stock decline by more than 30 percent since July 2005 as the government pushed towards privatization, analysts said.
"It was up about five percent for individual investors who bought at A$2 dollars so that's a nice little reward for long-suffering shareholders," said Austock Brokers senior client adviser Michael Heffernan.
The sale came a day after the government announced that unexpected enthusiasm for the Telstra sale had nearly doubled the value of an expanded government float to A$15.5 billion dollars (US$11.9 billion).
Minchin said on Sunday that retail investors would pay a total of A$3.60 a share and institutional investors A$3.70 for 4.25 billion shares -- up from the 2.15 billion shares originally on offer.
Yesterday's partial float -- the second-biggest sale in Australian corporate history -- is known as T3 because it is the third tranche of Telstra shares offered after T1 in 1997 and T2 in 1999, which brought in A$16 billion.
But some stockbrokers said the lower Telstra shares did not augur well for investors who were counting on making a stag profit yesterday on the sale of their new securities in Australia's biggest telco.