Australia govt to rake in $10 billion from Telstra issue

Analysts said shares were likely to start trading at a 20 to 30 percent premium. The huge demand for Telstra shares compares favourably with other major telecommunication sales this year including last month’s partial-sale of France Telecom, Telecom Italia and Portugal Telecom.

The public offer for France Telecom was 2.9 times oversubscribed, Telecom Italia two Times while the smaller Portugal Telecom was massively oversubscribed at 13 times.

The Telstra offer of 4.288 billion shares was mainly pitched at the nation’s "mum and dad" investors who were today allocated 40.7 percent of the stock.Finance Minister John Fahey said 1.886 million, or about one-in-ten Australians, had chosen to become Telstra shareholders and 81 percent of the Telstra shares issued would be in Australian hands.

Local institutions are to receive 21 percent and foreign institutions 19 per cent. Brokers were given 15.1 percent of the shares available for their clients while Telstra employees got 4.2 percent.

The government said about 75 percent of retail applications from small Australian investors were for up to 2,000 shares and those applications were satisfied in full.

"By any measure, the Telstra share offer has been a success with demand from retail investors, institutional investors, broker firm bids and eligible Telstra employees bidding for a total of 19.4 billion shares," Fahey said at a news conference.

Under the terms of the float, all subscribers to the issue were offered a part payment plan. Retail investors have paid a first instalment of A$1.95 per share compared to A$2.00 for institutions.

Retail investors who hold their shares until November 17,1998 will have their second instalment capped at A$1.35 per share for a total of A$3.30 while institutions will pay a final instalment of A$1.40 per share. Last Wednesday, the government moved the top of the indicative price range for institutional investors to A$3.40 per share from A$3.30 per share, citing overwhelming demand.

Fahey said funds from the part-sale of Telstra would meet a March 1996 election commitment to retire National debt and create Australia’s largest ever environmental project, the National Heritage Trust. The trust will undertake several projects including restoring two of the countries largest rivers.