Telstra share sale looking shaky

SYDNEY - Australia's finance minister says a retail share offering of the Government's stake in top phone company Telstra is looking "less likely" this year amid an impasse between the company and the competition regulator.

Retail investors are expected to form the cornerstone of any sale of the government's A$24 billion ($29.6 billion) stake in Telstra which investment bankers have recommended take place in October or November.

Telstra and the competition watchdog have been locked in talks for months over regulations which will govern a planned A$3.1 billion high-speed network called Fibre To The Node (FTTN) the company plans to build, as well as prices Telstra charges rivals to access part of its copper network called the unbundled local loop (ULL).

"To the extent that there is no clarity on the question of FTTN and ULL, then it's making a retail offer this year, and therefore in this term of government, less likely," Finance Minister Nick Minchin was quoted as saying in the Australian Financial Review yesterday.

Without a retail or institutional share offering, the Government would probably place most of its 51.8 per cent stake in Telstra in the so-called Future Fund, which has been set up to cover public service pension liabilities.

Minchin said transferring the Government's 6.4 billion shares into the fund would not depress Telstra's share price over the longer term.

"The question of whether we continue to hold the shares directly as we do now, or that they're transferred to the Future Fund, I don't think affects things one way or the other."

Telstra shares dropped a cent to A$3.67 by the close of trade.

- REUTERS