Australia: A Collision of Policy and Profit in Telstra Sale
Donald Greenlees writes in The International Herald Tribune:
The last time the Australian government sold a stake in the majority state-owned telecommunications carrier, Telstra, thousands of small household investors, under the influence of the dot-com frenzy, rushed to pay 7.20 Australian dollars a share.
But suffering the fate of many legacy telecommunications carriers around the world - excessive costs, outdated networks and declining market share - the good times for Telstra were close to an end.
For most of the small investors, the 1999 share purchase burned a hole in their pocket. The big winner was the government, which walked away with 16 billion dollars, or $11.9 billion, for the sale of 16.6 percent of the company.
With Telstra shares closing at 4.03 dollars on Wednesday and its management warning of lower profit ahead, the government has little chance of attracting a similar stampede of investors or a financial windfall of the same scale if it pushes ahead with plans to sell the balance of its Telstra holding later this year.