Fed: No quick sale planned for Telstra - Howard

AAP General News (Australia)
12-14-2004
Fed: No quick sale planned for Telstra - Howard

By Belinda Tasker

CANBERRA, Dec 14 AAP - Prime Minister John Howard today played down the prospect of
a quick Telstra sale and hinted the government might relax the company's foreign ownership
restrictions.

Mr Howard said that while the government had announced plans to carry out a scoping
study examining all aspects of Telstra's full privatisation, the $30 billion sale would
not necessarily take place in the next three years.

The government hopes to have the scoping study wrapped up by mid next year before legislation
paving the way for the sale is introduced to parliament.

Asked on radio if the start of the study meant Telstra's sale during the government's
third term was a forgone conclusion, Mr Howard replied: "No."

"But if we are to keep alive the option of selling Telstra during this term of government
we must do the scoping study now, otherwise time will be against us," he told ABC radio.

Communications Minister Helen Coonan has previously said the Telstra sale could go
ahead in 2006 if the necessary legislation passes parliament next year.

Mr Howard said the government was seeking advice on whether its remaining 51.8 per
cent shareholding in Telstra would be sold in one lot or in separate parts.

The government has pledged that Telstra will only be fully privatised if its services
in the bush are adequate and legislation passes parliament.

It also wants a good price for its shares.

One way of helping Telstra's share price, which remains below $5.00, could be relaxing
the foreign ownership cap on the company.

Mr Howard said the government had not given much thought to the cap, which limits foreign
companies from collectively owning more than 35 per cent of Telstra.

However, he acknowledged Telstra's share price could improve if foreign companies were
allowed to own a greater slice of it.

"These things are always difficult," Mr Howard said.

"On the one hand everybody likes everything to be fully Australian-owned. We all emotionally
would like that.

"On the other hand, we can sometimes get more investment and a better price and greater
activity if we allow greater levels of foreign investment."

As the Telstra sale moves a step closer with the start of the scoping study, some members
of the Nationals remain concerned about whether Telstra's services in the bush are good
enough.

Deputy Prime Minister John Anderson today said while mechanisms were being put in place
to improve services, some areas were still having difficulties.

But he denied suggestions the Queensland Nationals had drawn up a wishlist of projects
they wanted the government to fund using proceeds from Telstra's sale.

"No they're not, not in any formal sense," he said.

"We'll welcome any contribution to the debate (but) in the end it's important that
we walk through these issues in due course and I'm not going to get into a business of
some bidding war ... now."

Meanwhile, the competition watchdog has stepped up its calls for Telstra to split its
core businesses before the telco's full privatisation.

Australian Competition and Consumer Commission (ACCC) chairman Graeme Samuel said Telstra
should separate its wholesale and retail businesses to help improve competition in the
telecommunications industry.

However, he did not believe that if such a split occurred before Telstra's privatisation
that the government would not get a good price for its Telstra shareholding.

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KEYWORD: TELSTRA NIGHTLEAD

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