By GILES PARKINSON
To the relief of 1.6 million shareholders, the board of Australia's biggest company and the Howard Government, Telstra 2 shares are slowly edging back towards their issue price.
It has been a nervous wait for all concerned. If the Howard Government is to get re-elected, it may well depend on the mood of the half million first-time investors who took the plunge into Telstra 2 last October and its ability to deliver a massive pork barrel from the potential sale of Telstra 3.
Telstra 2 shares were sold in two instalments based around the prevailing market price. The first instalment was struck at $A4.50, and another $A2.90 payment is due in November this year. Most investors know that stock prices move up and down, but when the stock fell to $A6.50 and first-time investors were about to be asked to cough up $A2.90 for a stock that had a market value of $A2, the float and its aftermath were starting to look problematic for the Government.
But while Telstra shares rediscover their bearings and provide some comfort to the Government and the board, the investment community is still having some doubts about the inner workings of Australia's biggest corporate entity.
The hot topic of debate in this past week has been its strange behaviour over its investment in share registry and software group Computershare. Late Wednesday, Telstra dumped its 15 per cent stake in the company to the surprise of everyone, in particular the Melbourne-based share registry company.
Computershare has been by far the most successful of the strategic investments masterminded by Ted Pretty, the former chief of convergent business who now heads up the group's retail business.
But on Wednesday night it agreed to sell the lot for $A606 million, reaping a cool profit of $A318 million for its troubles.
But its profit could have been greater. Under a rather convoluted share sale orchestrated by JB Were and Credit Suisse First Boston, Telstra dumped two thirds of its shares in Computershare at $A7.25 each. The stock had closed earlier in the day at $A8.17.
It will get $A8.25 for the remaining third, but will have to wait up to a year to see the money. Computershare had offered to find a new strategic investor, and seemed confident it could do so at or near market prices. Certainly at a smaller discount.
But Telstra, for some reason, seemed to be in a hurry to get rid of the stock. It might have cost the company some $A50 million or more.
The manner of the sale raised immediate questions about the future of Telstra's other e-commerce market investments in Sausage Software and Solution 6 Holdings. Neither of these two stocks have looked particularly healthy after the tech slump and the collapse of the merger that was to give Telstra a 40 per cent interest in the combined group.
The sale raises questions over the purpose of Telstra's strategic investments. Telstra says Computershare was sold because it was a passive investment, but its stake in Sausage Software has now fallen below 5 per cent and would surely be under review.
As Australian investors seek to digest the implications of the Computershare sale and the future of Sausage and Solution 6, Telstra is about to embark on a new strategic alliance with Pacific Century Cyberworks.
It is a hugely significant deal. It represents the biggest investment by any Australian company in a foreign-owned entity - with some $A6 billion of assets and cash being thrown into the alliance. Yet Telstra, in return, will account for a mere 2 per cent stake in Richard Li's burgeoning giant.
The investing public, and its 50.1 per cent shareholder, will be looking for reassurance that the company is on the right track.
* Giles Parkinson is deputy editor of the Australian Financial Review.
<i>Sydney View:</i> Telstra proves headache for Howard
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