Battle for privatising Telstra in Australia starts early

CANBERRA - A looming battle in the Australian Senate for the full privatisation of telco Telstra heated up yesterday after one key independent senator said he was considering supporting the sale.

The conservative coalition Government needs to win four votes in addition to its 35 Senate seats to have enough support for sale of its 50.1 per cent Telstra stake, worth up to A$12 billion ($14.25 billion). That means it needs to convince a One Nation senator and both independents, and at least one Democrat, Labor or Green senator to break the party line.

The battle has already begun even though the Government has said it did not plan a further sell-down of its stake in Telstra before the 2003/04 financial year.

Tasmanian Senator Shayne Murphy, who defected from Labor last October over forestry issues, told Melbourne's The Age newspaper that although he had opposed the initial privatisation of Telstra, he would consider supporting the sale of the remainder.

"I think my, I suppose, global view would be that we should have maintained the full ownership of Telstra," he said.

"But given that 49 per cent of it has gone ... that would be something I would have to consider.

"If there were a set of circumstances that would lead me to [support a further sale], then I obviously would seek a deal for Tasmania, but I would want it very well targeted so we actually get some real benefit out of it."

Prime Minister John Howard reiterated yesterday that the Government would not push ahead with a third Telstra float, which analysts have projected could be worth up to A$12 billion ($14.2 billion), until services to rural and regional Australia had improved.

Rural resistance to the privatisation remains strong. One Nation Senator Len Harris said that while he was withholding final judgment until he saw the Government's legislation for the sale, most of his constituents in rural Queensland were against it.

But he was concerned that blocking the sale could hurt Telstra's ability to improve services, and Australia would lag behind in technology.

Treasurer Peter Costello, a strong proponent of the complete privatisation of Telstra, said it was not sustainable in the long term to have the Government owning 50.1 per cent and the private sector the balance.

"As it is, it is half pregnant - it is neither one nor the other - and in the interests of the shareholders I think we have to resolve that situation," he said.

* Australians living in remote areas out of mobile phone range were invited yesterday to apply for one-off grants of up to A$1100 ($1300) to help buy mobile satellite phone handsets as part of a Government drive to improve rural telecoms services.

Communications Minister Richard Alston said the subsidy was one of a list of initiatives to address rural concerns over services, mobile phone coverage at affordable prices and reliable internet access.