Stephen BartholomeuszAugust 31, 2006SO MUCH for those who...

Stephen Bartholomeusz
August 31, 2006
SO MUCH for those who predicted that the go-ahead for the Government's $8 billion T3 "fire sale" would result in an instant implosion in Telstra's share price and an overhang from the residual $23 billion shareholding destined for the Future Fund that would depress the price for years.
Telstra's share price has, quite predictably, strengthened modestly since the go-ahead for the sale was announced last Friday. It was predictable because the size and structure of the sale was designed to put a floor under the price.
What the T3 team chose to do was quite clever. It reduced the scale of T3 to one that is manageable and hinted at features of the sale structure that could make it quite attractive — instead of overhanging the market for Telstra shares, it has created a perception of scarcity and limited access.
The Future Fund's shares — about a third of Telstra's capital — will be held in escrow for about two years but, even after they are released from any sale restrictions, don't necessarily become a destabilising influence for Telstra shares. The fund will have more flexibility in dealing with the shares than the Government.
Neither T3 nor the Future Fund's eventual sell-down of its shareholding is going to occur in a fire-sale environment.