The Australian Government has decided to undertake a public Telstra share offer in October and November this year.
The Government intends to offer in the order of $8 billion of stock to retail and institutional investors, in Australia and overseas. The Government's remaining Telstra shares will be transferred to the Future Fund for the Fund to sell down over time.
The Government has gone to the past four elections promising to sell its Telstra shares. For too long, the Government has had a massive conflict of interest, as the owner and seller of Australia's largest telco; and as the industry regulator.
Selling Telstra continues to be good policy that is in the interests of existing Telstra shareholders, in the interests of the company and in the interests of the broader community.
We are proceeding with this sale because we believe that we can achieve an appropriate return for taxpayers at this time. Our sale advisers have been closely assessing market conditions and their unanimous advice to the Government is that there is sufficient demand to support an offer of this magnitude and it can be done at a fair price.
The sale structure will be finalised prior to the offer launch and will include instalment receipts - retail investors will be able to pay for their shares in two instalments over 18 months but will be entitled to the full dividend that Telstra intends to declare at 28 cents for the next year.
Telstra's Chairman, Board and senior management have assured the government of their strong commitment to this sale and their ongoing cooperation. In particular, Telstra has made it clear that they will not use the sale process as a vehicle to campaign for changes to the regulatory regime. The Chairman of Telstra has confirmed that comments attributed to Dr Burgess in today's press suggesting an ongoing campaign during the sale process to change the regulatory regime do not represent Telstra's position. Telstra has issued a press release to this effect.
The sale proceeds will be invested in the Future Fund, helping to address the challenges we face from an ageing population. Last year, the Government allocated over $3 billion for telecommunications projects, including Broadband Connect and the Communications Fund.
The Government does not have to own Telstra in order to regulate it. The Government regulates the entire telecommunications industry, regardless of Telstra's ownership structure.
The cornerstone safeguards of the Universal Service Obligation, the Customer Service Guarantee, price controls and other important consumer protections, will continue to apply to Telstra and all carriers because they are all provided in regulation and not subject to review until 2009.
The Government is committed to ensuring appropriate regulation of all telecommunications companies in the interests of protecting consumers, complemented by the role of the Australian Competition and Consumer Commission.
We believe the regulatory framework is now settled and we expect all companies to plan and operate within the rules that have been set. As with all public offers, a final decision to launch the offer remains subject to market conditions being conducive for a sale which achieves the Government's sale objectives.
The Government looks forward to offering Australians the opportunity to invest in Telstra through a sale in the last quarter of 2006.