minister c00nan says be wary buying.

Coonan's eye on TelstraScott Murdoch

August 12, 2006 12:00am
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COMMUNICATIONS Minister Helen Coonan believes Australian mum and dad investors are right to be wary of buying into Telstra.

A retail sale of the remaining 51.8 per cent government stake in the troubled telco is now highly unlikely.


Telstra stunned shareholders this week by declaring that its one remaining lure – a lucrative dividend – might not be maintained.

The move embarrassed the Government and prompted Senator Coonan to declare that her job just got harder.

"The price is going to be critical if there's no commitment to a future dividend," Senator Coonan said.

"That would be a material consideration for some shareholders.

"The great attraction of Telstra has been the dividend and that seems to have held up very well until now."

Prime Minister John Howard weighed into the debate and said current Telstra shareholders would be considered in the sale process.

"I don't want to do anything that duds them," he said.

Telstra has been a disappointment for nearly all shareholders.

The Government has seen nearly $8 billion wiped from the value of its holding in just one year.

The share price continued to fall yesterday, with the stock falling a further 4 cents to $3.76, compared with the 1997 float price of $3.30.

"I have great sympathy for the long-suffering shareholders in Telstra," Senator Coonan said.

The share price roller-coaster, she said, was the main reason the Government should sell Telstra.

"We don't think this is the best way to invest taxpayers' money.

"The volatility of the share price is proof of that."

The $8.7 million pay packet of embattled chief executive Sol Trujillo is now under scrutiny.

Senator Coonan said she would look at the company's results and could complain to the board about the size of Mr Trujillo's salary.

"I accept that shareholders may well be outraged at the magnitude of the package given to Mr Trujillo," she said.

Telstra this week reported a $3.1 billion full-year profit – the worst result since it listed.

The final tranche was due to be sold by the end of the year, meaning a decision on its future must be made before the end of this month.

A portion of the shares are likely to be sold to institutional investors with the remaining parked in the Future Fund.

Senator Coonan admitted there was opinion in the government's party room that Mr Trujillo should be sacked.

"It's not now," she said when asked if she had endured enough of Telstra's new leaders. "I don't know when you get to that point."

Telstra has had $16 billion sliced from its value since Mr Trujillo took the reins a year ago.