2 instos dump entire tls holdings Telstra shares dumped after...

2 instos dump entire tls holdings Telstra shares dumped after bagging by boss
Michael Sainsbury and Robert Clow (The Australian)
03sep05

TWO leading financial institutions dumped their Telstra shares yesterday as John Howard criticised the company's management for their damaging comments.

Telstra shares fell a further 8c yesterday to $4.59, a day after its policy and communications chief Phil Burgess said he would not recommend the company's stock to his mother.

The two institutions' decision to sell their entire shareholding in Telstra has extremely serious implications for plans to fully privatise the company at the end of next year.

Mr Howard rebuked Dr Burgess - brought in by fellow American and new chief executive Sol Trujillo - for branding Telstra "a loser".

"For somebody in that position to be talking in that fashion is not helpful to the company and I'm frankly surprised that he continues to do it," he said.

"If he imagines that the Government will change its attitude on regulation to protect the public and to promote competition by continuing to say those things, then he's wrong."

Mr Howard's comments were backed up by Peter Costello. who said: "The matters for the directors are to run the company and to preserve value and increase value for shareholders."

The Treasurer urged Telstra management to stick to the business of running the company and to leave the issue of industry regulation to the Government.

"The Government's obligation is to ensure there is a competitive framework, that the ownership is resolved (and) to determine what happens to the proceeds," Mr Costello said.

He again reinforced the Government's firm position on Telstra regulation, saying the regulatory system was designed to promote competition. "Telstra has to work within that," he said.

"I wouldn't want to see a less competitive regime than we currently have."

Telstra executives remained defiant, issuing a terse statement saying it would continue with its campaign against competition rules it claims are damaging its business.

"The impact of regulation on Telstra is also understood by the investment community and shareholders," it said.

"Telstra does not want the focus of this public discussion to be on personalities but on policy. It is a debate that is in the best interests of all parties.

"Telstra has repeatedly said that it is absolutely committed to regional and rural Australians. Anyone saying otherwise is misrepresenting our position."

Opposition Leader Kim Beazley said selling shares in Telstra at $4 or less would be a betrayal of people who bought shares when they were much higher.

"People who paid T2 prices worth $7.40 and the previous one was $4.80, if Telstra goes away for the sort of $3 to $4 mark you're talking about here, it would be a massive act of betrayal of the shareholders of T1 and T2," he told ABC radio.

Queensland Nationals senator Ron Boswell, who helped craft the Government's $3.1billion Telstra package, said it was clear Telstra's top American executives had little idea how Australia worked.

Senator Boswell said it was time for Mr Burgess and Mr Trujillo to realise it was the government that ran Australia, not the executives of big companies.

"I don't know how the political system works in the US, but when you attack the government here, you attack the people of Australia," he said.

"Someone ought to tell him (Mr Burgess) the government plays the game, they keep the score."