short selling, page-9

It is unfortunate for those traders who still hold TLS. I consider myself lucky that I off loaded all my TLS warrants today.

The following report on the Future Fund selling might have a great impact on the TLS sp tomorrow. The people who hold for the longer term will benefit.

=DJ UPDATE: Australia Future Fund Sells Down Telstra-Sources20/08/2009 05:51PM AEST
By Lyndal McFarland and David Rogers
Of DOW JONES NEWSWIRES

MELBOURNE (Dow Jones)--Australia's Future Fund is selling a quarter of its stake in Telstra Corp. (TLS.AU) for A$1.72 billion though a block placement to institutions, people familiar with the situation said Thursday.

The people, who did not want to be identified, said that the government-owned Future Fund was selling some of its stake through brokerage UBS.

The sale comes after a long period of poor performance for Telstra shares and ahead of an uncertain future for the company as the government rolls out plans for a separate A$43 billion national broadband network and undertakes a review of regulation of the industry.

Two people said that the fund was selling 497 million shares in the telecommunications group at A$3.47 a piece through the underwritten deal - a 5% discount to the group's closing price Thursday of A$3.65 a share. Telstra is due to pay a dividend of 14 cents a share, with a record date of Aug 28.

A Telstra spokesman declined to comment.

Prior to the sale, the Future Fund held 16% of Melbourne-based Telstra's shares, but there has been speculation for some time that the fund was keen to lower its interest in the telecommunications group to fund investments in other areas.

The Future Fund - an independently run fund set up by Canberra to finance public service pensions - inherited a large Telstra stake after the previous government fully privatized the telecommunications group in 2006.

The fund wasn't able to sell any of the shares until November of last year.

"Its clear the fund is trying to diversify its investments," said one fund manager.

The Future Fund had assets worth A$58.09 billion at the end of March.

In May, Future Fund Chairman David Murray took a very public swipe at Telstra and its former management team, saying the fund was disappointed with the telecommunications group's share price weakness, and said it had expressed that concern directly to the company.

Over the past 12 months, Telstra has underperformed the broader market, falling almost 18% versus an 11% fall in the benchmark S&P/ASX 200 index, amid concern about the group's outlook in light of government plans to build a new high speed national broadband network.

Telstra's new chief executive, David Thodey, has adopted a more conciliatory approach than his predecessor Solomon Trujillo in dealing with the government on the new network.

Thodey has indicated he's more willing to negotiate with the government on participating in the new network.

Trujillo's tenure was marked by public clashes with law makers and regulators about the regulatory environment.


-By Lyndal McFarland, Dow Jones Newswires; 61-3-9292-2093; [email protected]