Now that the Government has succeeded in getting the third tranche of Telstra shares sold to investors, with the rest of the Government’s shareholding to be placed in a ‘Future Fund’ from which more shares will be sold down over time, the Government’s long held dream of fully privatising Telstra is closer to reality.
But with the Government still holding, or rather allocating to the Future Fund, a total of 17% of Telstra shares, the Government still holds some of the cards and can still exert influence over the Telstra board, even if the whole idea of selling more Telstra shares was to end this conflicted situation.
The Government has reaped a $15.5 billion windfall from the sale of Telstra shares which will be put into the plus side of the Federal Budget’s balance sheet, nearly double what the Government originally expected. Sadly this money, once spent on roads, health, the military, Government welfare and other programs and initiatives, will be gone, whereas the multi-billion dollar profits that Telstra once gave to (or was taken by) the Government on a regular basis will now in large part go to shareholders.
While this is no bad thing for shareholders, and is capitalism at its finest, which this author wholeheartedly supports, it effectively ends the golden goose of profits the Federal Government could count on in times of need as the company is effectively no longer under Government control.
Australian Federal Finance Minister Nick Minchin is reported to be delighted by the results of the Telstra T3 share offering, which was heavily oversubscribed.
Now that Telstra is majority owned by local and international shareholders, we can only hope that the carrier will end its squabbles with the Government and the Australian Competition and Consumer Commission and continue its recent rapid push into providing faster fixed and wireless broadband to all Australians.
Telstra has very recently unveiled the world’s largest 3.5G HDSPA mobile and wireless broadband network, with a range 100 times greater than competing 3G/3.5G networks in Australia, while fixed ADSL broadband services were finally dramatically boosted in speed.
The standard ADSL 1 service, previously capped to a 1.5Mbps maximum, has been uncapped to 8Mbps speeds, while ADSL 2+ services are available in areas where the competition has been offering such services over the last 18 months. A larger rollout of ADSL 2+ to more Australians is being held up over continuing spats with the Government and regulatory authorities, with Telstra claiming that ‘regulatory constraints’ are getting in the way.
Telstra is also working on a Fibre-to-the-Node project, although this has been (at least temporarily) shelved in favour of getting the ADSL network upgraded for now.
For more information on the specifics and the minutiae of the share movements that transpired today, you can visit this article from the Sydney Morning Herald, while our own Stuart Corner in this article also has some more detail.