Minchin pushes Telstra sale Michael Sainsbury and Steve Lewis MARCH 31, 2006
FINANCE Minister Nick Minchin has thrown his weight behind the Government selling its entire 51.8 per cent Telstra stake, including a widespread retail offer, on the eve of a report by the competition regulator that may dictate the final sale price.
Senator Minchin now expects a cabinet decision on whether to proceed with a full or partial sale of a stake now worth $23 billion -- down from $30 billion a year ago -- before the end of May. "We have been wanting to get out of this stock entirely for a very long time, so obviously in an ideal world, we would exit the whole stock," Senator Minchin said in an interview with The Australian.
The minister also indicated sympathy for Telstra's bid to have a planned $3 billion residential fibre network exempt from normal regulations.
"It is critical that in assessing competition policy one does not ignore the critical impact on incentives to invest, particularly in a company this size," Senator Minchin said.
"Competition shouldn't be an end, it should be a means to an end and must always be balanced against the importance of ensuring industry players have the incentives to invest."
But Senator Minchin downplayed concerns that mum and dad shareholders who bought Telstra shares in the 1999 T2 sale may baulk at paying far less after taking a big loss on their shares.
"That is not coming through," he said. "We do market research with Telstra shareholders, as well as non-Telstra shareholders. They do understand the market is up and down ... there is far less of a problem than some might assume."
Senator Minchin's comments come amid signs that the recent fall in Telstra shares may have ended. The company's stock rallied 11c, or 3 per cent, to $3.74 yesterday, ending two days at its lowest closing price since the float of Telstra.
Volumes were the highest this year following positive analyst reports and unfounded rumours that the Government will announce more Telstra-friendly access prices today.
Andrew Hines, the Morgan Stanley analyst who has for many years led negative sentiment on Telstra, has taken his "sell" recommendation off the stock.
"Telstra has underperformed the ASX200 by 80 per cent in the past two years and, whilst further underperformance is possible, we now see the risks/rewards as more evenly balanced," Mr Hines said.
But he did not see the telco winning any regulatory relief and said Telstra's campaign was at odds with its standing as one of the world's most profitable telcos.
Communications Minister Helen Coonan will today receive a report from the Australian Competition and Consumer Commission justifying its decision for lower access pricing to Telstra's network across four separate geographic zones.
Telstra asked the Government to overturn the ACCC ruling last December and install an average national price, but this has raised competition fears across the $33billion-a-year sector.
"It hard to think of an industry that is more heavily regulated," Senator Minchin said.
Telstra has mounted a massive lobbying campaign in recent weeks, targeting Coalition backbenchers in their electorates and in Canberra this week.
The push, which some MPs have labelled as "bullying", culminated in the visit of the company's finance chief John Stanhope to meet ministerial advisers yesterday. Mr Stanhope backed the company's full privatisation in comments made earlier this week. He has also cast doubt over the telco's ability to maintain its 28c a year dividend if it does not get the regulatory relief it is seeking from the Government.
The Australian
TLS Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
(20min delay)