telstra now, page-6

aap: telstra shares to take off. Telstra shares likely to rally
October 10, 2004 - 12:34PM

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Shares in Telstra could rally on Monday with the re-elected coalition government poised to gather enough Senate seats to sell the rest of Australia's biggest telecommunications company.

The coalition, which has long been expected to sell its majority 51.05 stake in Telstra, gained 38 of the 76 Senate seats as it romped home in the federal election.

With counting still underway, political newcomer Family First looked set to pick up what could be the key negotiating seat should the coalition miss out a 39th spot that would give it control of the upper house.

Ausbil Dexia director of equities Paul Xiradis said it appeared the coalition would be able to finally push Telstra sale legislation through the upper house.

"It will be interesting to see how the market reacts tomorrow with Telstra, there could be a bit of weakness initially but given the prospect of a sale is high, down the track, I think it will be a positive," Mr Xiradis said.

Macquarie Equities associate director Lucinda Chan said Telstra shares were likely to do well tomorrow, "with uncertainties about communications policies removed".

Macquarie Bank chief economist Richard Gibbs said he suspected there would be an improvement in the telco's share price on the prospect of an eventual sale.

"It would remove that impediment to the growth and expansion of the company that a lot of investors have attributed to the split in ownership," Mr Gibbs said.

"That is not to say there won't be conditions upon Telstra, I am sure they will be as a private entity, but obviously the company would not be shackled by serving two masters ... in terms of serving private equity owners and the government."

Their comments came as Family First said it would not support a full sale of Telstra.

© 2004 AAP