Telstra shares push Future Fund to $50 billion

THE Federal Government has transferred its remaining 17 per cent Telstra shareholding into the Future Fund, boosting the value of the fund to more than $50 billion.

The final Telstra stake moved to the fund is worth about $8.9 billion and represents the residual shareholding that was not allocated last November in the T3 offer.

Finance Minister Nick Minchin said the transfer of the shares to the Future Fund represents the final step in the full privatisation of Telstra. The Future Fund was set up after the 2004 federal election as an investment arm to deal with ageing population issues, specifically government’s unfunded superannuation liabilities.

The transfer of the remaining Telstra shares also relieves Government of being both the industry regulator and a major shareholder of the industry’s dominant player.

Senator Minchin said the Telstra share’s transferred to the fund would be held in escrow for two years. Any sell down decision thereafter would be an arms length decision made by the Future Fund Board.

He also said the investment performance of the Future Fund would be judged independently of its Telstra shares until the Telstra stake could be reduced to a level that did not dominante the fund.

“The transfer also finally ends the Government’s untenable conflict of interest as the regulator of telecommunications companies and the owner of Telstra,” Senator Minchin said in a statement.

“I have also issued a Ministerial Direction to the Future Fund Board of Guardians today to reflect the two year escrow period for the Fund’s Telstra shareholding, subject to the limited exceptions outlined in November’s T3 prospectus.

“With the sale of the Government’s shareholding in Telstra now complete, the benefits of a privately-owned Telstra are increasingly evident. All Australians are benefiting from a reinvigorated Telstra investing in better networks and competing vigorously for customers, Telstra’s shareholders are seeing their investment increase in value, and all taxpayers are benefiting from the sale returns,” he said.

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Coonan holds Telstra to 3G promise

GOVERNMENT has completed the first of two audits on regional mobile telephone coverage aimed at ensuring Telstra honours promise that its Next G network will match or exceed the coverage of its older CDMA.

Communications Minister Helen Coonan said in a statement government was closely scrutinising the rural coverage audits as well as Next G handset availability to ensure consumers were not penalised by Telstra’s move to 3G technology.

At the height of the debate over the T3 sale last year, Telstra announced it planned to shut down the existing CDMA network in January next year, but committed to making its Next G mobile network coverage as good or better than CDMA.

Senator Coonan said she welcomed Telstra’s announcement last week of a Next G upgrade that included new cell technology with a 200 km range and higher speeds, but reminded Telstra of its commitment nonetheless.

“The Government is also mindful of Telstra ensuring there is a smooth transition to the new network for its customers, particularly those living in rural, regional and remote areas,” Senator Coonan said.

It is a sensitive issue in the bush, where Telstra CDMA is often the only available network and is heavily relied on. And in an election year, nothing is being left to chance.

“An independent audit comparing Next G coverage with CDMA coverage is a key part of verifying Telstra’s public assurance that it will not shut down the CDMA network until Next G provides the same or better coverage and services,” Senator Coonan said.

“Even if this assurance is met, Telstra has stated that the CDMA network will not be switched off before 28 January 2008,” she said.

A working group established by the Minister is currently considering other issues relating to the CDMA-Next G transition, such as the information Telstra is providing customers, handset availability, coverage, and contractual matters.

But it is network coverage that is most critical – both to rural and regional Australians, and to a Government seeking re-election.

The Australian Communications and Media Authority (ACMA) has now completed its audit of CDMA at a broad selection of about 100 sites across the country. The sites include flat, mountainous and average terrain, wet rice-growing country and river flats, and while they include the city and regional centres, the focus was on rural, regional and remote areas.

The field tests and analysis of CDMA coverage was the first of two national audits to be completed this year. The second will test coverage of the Next G network once Telstra advises that the new network is fully deployed.

Regardless of Telstra’s newly majority-private state, mobile phone coverage is a critical issue in rural electorate all over Australia.

The Nationals’ support of the T3 Telstra share offer was not won until it had it had a firm commitment from the company and from the government that the Next G third generation mobile network coverage would be the same or better than the CDMA network on which rural Australians rely.

Queensland Nationals Senator Barnaby Joyce and NSW Nationals Senator Fiona Nash both actively and aggressively lobbied both inside and outside the joint partyroom to make sure mobile coverage did not suffer either because of the sale or because of the move the 3G technology.

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