The Australian government will sell eight billion Australian dollars (€4.7 billion) worth of shares in Telstra in a public offering after the stock slumped amid poor earnings and regulatory issues.
The decision to offer just over a third of the country's top telecoms firm in an offer timetabled for October/November seals a long-held plan of Prime Minister John Howard, who argued the government's majority in Telstra and role as telecom industry regulator was a conflict of interest.
Earlier plans to sell the government's full 51.8 per cent stake were ditched after profits slumped at Telstra's high-margin fixed-line business and the shares, which closed at 3.50 Australian dollars today, dropped 26 per cent in the past year, battered by wrangling over access prices to Telstra's copper network.
The government will transfer the rest of its holding into a fund set up to cover public service pensions.
An offering of eight billion Australian dollars, about 36 per cent of the government's stake at the current share price, is in line with the market's scaled-down expectations, analysts said.
The government's entire stake is worth 22.5 billion Australian dollars, leaving about a third of the company in the Future Fund, to be sold down after being held in escrow for two years.
Earlier this month, Telstra posted a 26 per cent drop in annual net profit to its lowest in eight years as revenue fell at its high-margin fixed-line business and flagged flat-to-lower underlying earnings in 2007.
It also abandoned plans to build a high-speed, fibre optic network because it could not agree with the regulator over costs.