CANBERRA - Australia's decision to keep a 51.8 per cent stake in Telstra, the nation's biggest telephone company, has been a "shocking investment", Treasurer Peter Costello said.
"We do not believe there is any reason the Government should hold on to that 51 per cent and as it turns out
it has been a shocking investment," Costello told Australian Broadcasting Corp radio yesterday. "We can offer that 51 per cent, but we will not do it in a fire sale."
Telstra's shares have fallen by almost half from the A$7.80 institutional investors paid when the Government last sold a stake in the company in October 1999. They've declined 6.1 per cent this year - on top of a 20 per cent drop in 2005 - amid complaints by the company that government regulation is crimping its profitability. Government ministers will decide in May whether to go ahead with the sale of Telstra this year.
"We will only do it at a time when we can get reasonable value for the taxpayer," Costello said. "If there is not a good return for the taxpayer, we will not. We will hold until such a time there is a good return for the taxpayer."
Costello on December 15 slashed the amount the Government expects to get from the sale by 20 per cent to A$26.4 billion ($31.2 billion), or A$4.13 a share.
The stock fell 5c to A$3.69 at the 4.15pm close in Sydney.
The Government sold a third of Telstra in an initial offering in November 1997, raising A$14.2 billion. The Government sold 16.6 per cent of Telstra in October 1999, raising A$16 billion.
- BLOOMBERG
