Roadshow Abroad Receives A Tepid Reception
By Barbara Adam
The Wall Street Journal
Thursday, October 12, 2006
CANBERRA, Australia -- The first stage of the international
roadshow for the Australian government's 8 billion Australian
dollar (US$6 billion) offer of Telstra Corp. shares hasn't
wowed investors, Finance Minister Nicholas Minchin said
The government's disposal of its stake in Telstra, Australia's
biggest telecommunications group, will end Canberra's conflict
of interest that arises from being the company's majority
shareholder and its regulator.
Telstra Chief Executive Solomon Trujillo and John Stanhope, the
company's chief financial officer, are meeting investors in
London this week, after a series of appointments with U.S. fund
managers last week.
"As is always the case with these roadshows, at some
appointments they're very interested and at others not so," Mr.
Minchin said in an interview. "On balance they're reasonably
happy with what's happening."
Telstra is trying to generate international interest in the
company as it struggles with rising costs and declining revenue
from its core fixed-line business.
In the days before the government released the Telstra
share-sale documents, Telstra cut its long-term earnings
forecasts and failed to guarantee its generous dividends beyond
the current financial year.
Oppenheimer Capital of New York last month said it was unlikely
to buy any shares in the Telstra offer, known among investment
bankers as T3.
"Institutions are underweight, so there will obviously be a
number of funds who will be interested. It's a matter of
getting to them with the right story," Mr. Minchin said. "We
want to generate what demand we can from U.S. institutions and
European institutions, remembering Australian domestic and
retail is going to be what it's all about."
The government has reduced its stake in Telstra from 100%
ownership to 51.8% through share offerings in 1997 and 1999.
Telstra's stock price yesterday fell 1.1%, or four Australian
cents, to A$3.67. The stock has fallen about 25% since Mr.
Trujillo joined the company in July 2005 and it has more than
halved from the A$7.40 sale price seven years ago.
After T3, the government's remaining stake -- about 35% of
Telstra's issued shares -- will be transferred to the Future
Fund, where they will be held in escrow for two years.
contributed to this article.
Write to Barbara Adam at