State's sale of Telstra closer

CANBERRA - Telstra's top executives, including new chief Sol Trujillo, arrived in Canberra yesterday to meet Government officials planning the A$33.8 billion ($37.2 billion) sale of the state's controlling stake in Australia's biggest telephone company.

"I'm meeting several very important stakeholders about the future of Telstra," Trujillo, 53, said in an interview on his arrival at Canberra Airport.

The US-born Trujillo, who joined Melbourne-based Telstra on July 1, was accompanied by chairman Donald McGauchie for his first meetings with Prime Minister John Howard, Communications Minister Helen Coonan and Finance Minister Nick Minchin.

Telstra yesterday confirmed newspaper reports that up to 90 account executives in its business and Government division had been fired in recent days.

Trujillo, who last week appointed Boston consultants Bain & Co to review Telstra's costs, declined to comment further on the job cuts.

Telstra shares closed 1Ac down at A$5 in Sydney yesterday.

Howard revived plans to sell the Government's 51.8 per cent stake in Telstra after winning control of both Houses of Parliament in the October election for the first time, allowing him to pass legislation that had previously been rejected by opposition lawmakers.

The legislation may be introduced as soon as next month, Coonan said last week.

The Government said this month that it had received a 1100-page report from investment banks UBS AG and Caliburn Partnership, examining the possible structure and timing of the sale, planned for late 2006.

Trujillo said he had not read the so-called scoping study.

The UBS report advised the Government to consider raising the foreign ownership cap on Telstra to 49 per cent from the current 35 per cent limit, the Australian said this month.

- BLOOMBERG