Telstra axes share buyback

SYDNEY - Telstra has dropped plans for a $A5 billion ($5.45 billion) share buyback ahead of its planned privatisation over a dispute with the Australian Government on new regulatory reforms, the Australian Financial Review reports.

Telstra shares closed 9Ac lower at A$4.58, having touched A$4.57 during the day - the lowest level since May 2004.

The report yesterday said the share buyback was recommended in a government-commissioned scoping study outlining the timetable for the A$30-billion-plus privatisation of Australia's biggest phone company.

The newspaper said Telstra argued the buyback would be jeopardised if the Government stood its ground on the new rules which would open the telecommunications market to more competition, cutting the company's profits and pushing its share price down.

A spokesman for Telstra said he could not comment on the scoping study or any suggestion of a buyback. "The study was prepared for the Government and it is not a document I have seen," Michael Grealy said.

The newspaper also reported yesterday the adviser to Telstra chief executive Sol Trujillo saying he would not recommend the stock.

Asked whether he would buy Telstra shares at current prices, adviser Phil Burgess was quoted as saying: "I'll keep that to myself, but I sure wouldn't recommend them to my mother."

Laws to allow the Government to sell its 51.8 per cent in Telstra are likely to be introduced into Federal Parliament next week.

- REUTERS