CANBERRA, March 30: Small investors rather than large institutions will again be favoured in the upcoming sale of shares in local telecom giant Telstra Corp, finance minister John Fahey said on Monday.Fahey also said legislation would ensure service levels for regional Australia -- a key concern of those politicians who can block the A$40 billion-plus ($27 billion) sale -- were guaranteed.
"It is the government's intention to give an opportunity to ordinary Australians to invest in this great Australian company," Fahey told Australian Broadcasting Corp radio.Small or "mum and dad" investors were the focus of the first tranche sale last November, which raised A$14.3 billion.
"We suggest again, there are plenty of shares in that company and in due course there will be sufficient for others, including institutions," Fahey said.
Existing shareholders, including retail investors, would be able to buy Telstra shares in the sale ahead of non-holders, which Fahey said was consistent with marketpractice.
The planned sale was announced by prime minister John Howard earlier this month, and he has made it a key plank in his re-election strategy. An election is due by mid-1999, but is widely expected to be called later this year.
Institutions have been major buyers of Telstra shares in the last five months as they built up their portfolio to index-weighting levels, pushing the stock to record highs in recent weeks and in the process doubling the investment of those who took part in the float.
Telstra is currently a top 10 company on the Australian Stock Exchange with its one-third listing but will dwarf all other companies when it is fully privatised, having a market capitalisation of about A$60 billion.
Resources and steel giant BHP Co Ltd is currently the largest company in Australia with a market value of A$31.5 billion.
The government does not have a majority in the senate, and needs one vote to pass the sale legislation, which has been fast-tracked and will be introduced into parliamenton Monday.
With the Labour opposition and other minor parties opposed to the sale, independent senator Brian Harradine -- who supported the first tranche sale -- has the vote the government needs.
But he has expressed concerns that a full privatisation would be at a cost to services in regional areas.
"I'd say at this stage it's a very tall order to expect parliament to rubber stamp a full privatisation of Telstra," he said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
