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For Telstra, Deal Is Option
CEO Says No Suitors Have Come Forward; 'Not on Our Agenda'
By Susan Murdoch
The Wall Street Journal
Tuesday, May 15, 2007

MELBOURNE, Australia -- Sol Trujillo, chief executive of Telstra Corp., said the telecommunications company would consider any takeover options, but it hasn't been approached by another party.

There has been speculation among analysts in recent weeks that Telstra would make a logical private-equity target, mainly because of its strong cash flows and low gearing.

Speaking to reporters yesterday at the Future Summit 2007 conference in Melbourne, Mr. Trujillo was asked whether the company had been approached.  "The answer to that is simply no," he said.

Mr. Trujillo said the board would always consider what is in the best interests of shareholders and would look at "all options."

"In terms of a takeover, that's not on our agenda.  It's not something we think about," he said.  "There's a lot of media speculation, but that's what I would call it -- it's all speculation."

Fueling the market talk is the forthcoming sale of the Australian government's 17% stake in the telecommunications company.

Canberra transferred its remaining holding in Telstra to its Future Fund, an investment vehicle set up to meet future public-service pension liabilities, as part of its final stake sale last year.  The fund will be able to sell down that stake later this month.

Asked whether the May 20 sell-down date could be a catalyst for a possible buyout, Mr. Trujillo said:  "I don't look at things like that as the driver of our business.  What is going to drive value creation for our shareholders is performance," Mr. Trujillo told CNBC Asia's Squawk Australia program.

Mr. Trujillo said he thinks shareholders are happy with the performance of the stock price since the company launched its new business strategy.

Credit Suisse analyst Justin Cameron said in a note to clients this month that a private-equity group could pay up to 6.50 Australian dollars (US$5.41) a share for Telstra and still generate an internal rate of return of 20% on a conventional buyout structure.

Telstra shares rose four cents, or 0.8%, to A$4.90 on the Australia Stock Exchange, giving the company a market capitalization of A$50.1 billion (US$41.7 billion).  Telstra's shares have rallied since the government sold its stake in December amid increased investor confidence in the industry globally.

Write to Susan Murdoch at