Cooperation with Telstra? Give us a break

Francesco says:

05:52pm | 10/10/09

What is the Australia government becoming when it wants to ban a company from participating in a new business opportunity simply because the company has business assets the government wants it to divest.  This is anti-competition, anti-capitalist and anti-market.  If the company has anti-market operations then leave it to the appropriate watchdogs to deal with such as ACCC, not by fait accompli announcements.  Wait for backlash at the ballot.

Michael says:

03:08am | 17/09/09

Peter of QLD, you are deluded if you think that other companies don’t spend money on infrastructure and you’re even more deluded to praise telstra for what little they have done, did you realise that Telstra was fined millions for deliberately blocking other ISPs from their exchanges? what this means is that others wanted to provide us with services and telstra was fined for stopping them.

jim says:

04:39pm | 16/09/09

Conroy’s doing this because he’s stuffed up the NBN… sorry folks, NBN doesn’t seem to be happening. He’s too busy with filters and now with the separation of NBN

Don Clark says:

04:18pm | 16/09/09

Oz:
The tosh about the Future Fund Telstra sale 3 weeks ago?
Cos there’s *nothing* in it. The lightweight Baldwin (Shadow Minister for 2nd string bits of Defence) had a little tilt. Nothing in Palriament.
or
The Telstra “use it or lose it” choice?
Who knows! Perhaps they’ll have got around to working out something to say before the legislation comes up for debate.

Meanwhile, after the minor hysterics of yesterday (led by Senator Fielding’s latest blunder, a simple misread of a throwaway line on The Punch), the Telstra share price has now recovered its composure as analysts start to take in the longer-term possibilities.

Time to stick a fork in this one, it’s done to a turn.

OzNick says:

01:01pm | 16/09/09

How come the opposition hasnt responded to this?

Bundygil says:

12:48pm | 16/09/09

About bloody time!! Telstra should’ve been broken up from the start. It was just successive governments being too scared to do it.
What a load of old rope from the bleaters.

Carmen. says:

10:58am | 16/09/09

I got a letter from a Southern Phone Co. offering free mobiles [Nokias], free fixed line rental , mobile call credit , plus, plus plus -and they claim that the Commonwealth Government financed Southern’s establishment from the sale of Telstra shares.  Who is this Philip Herrick that signs as GM and where does he come from?  Is Kevin now giving free mobilesand other goodies to all and sundry with our money?

LittleMissSciFi says:

09:25am | 16/09/09

Don’t you just love it when your government has to resort to threatening a private company to get it way.

Don Clark says:

07:51am | 16/09/09

Like most of the big issues that come up on The Punch, this is not one that personal attacks and sneering will help answer.

Just consider this. No-one on the Future Fund board or on the Government front bench has personally benefitted from the 20 Aug sale, nor will they in the future.

The Future Fund still holds a very large amount of Telstra shares. In a market showing signs of at least early recovery from a major crisis, they prudently sold-off, yet still hold some 10 or 11% of Telstra - again a large holding, to be prudently managed in quite difficult times.

Just how, exactly, would it benefit the Fund or the value of those shares if the Board were guilty of clumsy insider trading? What benefit would the Government get?  It simply doesn’t make any sense at all. None.

No rat. We’re talking about a really major investment holding here, for which funds are locked up until 2020.  The board arent’ a pack of socialist puppets. They are finance professionals, sure, but so what. We’re not talking about Flybynight & Fancyfree Investments 2006 NL.

What would YOU have done,  faced with a recovering market while still holding a large 17% bag of Telstra in the $3 range?

Enough. Off to make the day go…see youse.

Ray Bennett says:

01:18am | 16/09/09

Hey! Here we have the ever gullible “public” oh so enthusiastic about Canberra creating yet another bureaucratic monopoly. You just have to be kidding if you think this NBN Co. has any prospect of giving Oz cheaper, more efficient, and cost effective telecommunications than what is in prospect now from Telstra/Optus etc. Just think - why was Telstra ever privatised? And as for Telstra shareholders copping it sweet, wake up - there would be very few in Oz who do not have a vested interest in Telstra’s wellbeing, either as direct shareholders or as members of Super Funds which have vast shareholdings in the telco. Surely the GFC has wreaked enough havoc with the value of our super funds, without Conroy et al giving more grief!
Oh - and that money in the Future Fund was largely contributed by Telstra shareholders; thankfully, the recent sell-down preserved at least some of it for the national good.
Now, let us all hope like hell that the incentive remains for Telstra to preserve the copper network, on which we still vitally depend, until the fabulous fibre passes our door; I am quite happy with ADSL2+ .

Chris Jones says:

11:53pm | 15/09/09

Don Clark: Are you serious, or are you just playing the Straight Man in this comedic posse? The length of time Telstra shares have been on the nose can be measured in years, yet the Future Fund dumps the bulk of it’s holdings (keeping just enough to deflect awkward questions, perhaps) a few WEEKS before the government gives Telstra the big kabosh. A mere coincidence? Yes, it was Howard the Horrible that set the Fund up, but as other posters have noted, Labor have an equally strong vested interest in it. Senator Fielding may not be the brightest downlight in showroom but, in this particular case, he’s not the only one who smells a humongous rat!  MEMO Federal Government: Next time you decide to try flogging shares to the public, spend the money on some new fridge magnets instead- At least SOME people will be interested in collecting them.

Andrew says:

10:28pm | 15/09/09

Peter of QLD: “Those who want to be like the glorious USA when there Federal Government split up Ma Bell, should look at the results” Yes indeed one should, but then appreciate that this is not what is being proposed here. The result would be a government-owned wholesale arm (which given it is public infrastructure and arguably national security rests on it, I think should be government owned) and a totally private retail arm (which should be out of government hands because government shouldn’t be doing what business can do better). The US separation created a plethora of similar but smaller sized companies to each other, which was the problem with their approach.

James says:

09:34pm | 15/09/09

Dear Rupert,

I know that you are waiting for Telstra to be forced to divest 50% of Foxtel so that News Corp can get its hands on it, but after that, make sure this government is voted out at the next election.

Peter of QLD says:

08:30pm | 15/09/09

Telstra is building one of the fastest broadband wireless networks in the world. If you spend $40bn and subsidise it NOW, we will have one of the fastest and efficient wireless networks in the world TODAY. The speeds quoted will render the NBN unviable. Little wonder the government has to split Telstra, the NBN could be severely compromised if not bankrupted by Telstra!
I wish one other company would build some infrastructure in my region.
Only Telstra foots the bill. Who stands to gain the most from the split? mainly those companies who will not build infrastructure in one of the fastest growing regions in Australia.
We get what we vote for. Those who want to be like the glorious USA when there Federal Government split up Ma Bell, should look at the results. Poor regional servous, conflicting standards, and still complaints on costs.

Peter of QLD says:

08:30pm | 15/09/09

Telstra is building one of the fastest broadband wireless networks in the world. If you spend $40bn and subsidise it NOW, we will have one of the fastest and efficient wireless networks in the world TODAY. The speeds quoted will render the NBN unviable. Little wonder the government has to split Telstra, the NBN could be severely compromised if not bankrupted by Telstra!
I wish one other company would build some infrastructure in my region.
Only Telstra foots the bill. Who stands to gain the most from the split? mainly those companies who will not build infrastructure in one of the fastest growing regions in Australia.
We get what we vote for. Those who want to be like the glorious USA when there Federal Government split up Ma Bell, should look at the results. Poor regional servous, conflicting standards, and still complaints on costs.

The Vegan says:

07:51pm | 15/09/09

Looks like time to buy more undervalued Telstra shares!

Shane From Melbourne says:

06:37pm | 15/09/09

Since we are swapping conspiracy theories about insider trading from the Future Fund, you may as well trot out that there was a second shooter at the JFK assassination, aliens at Roswell and other bizarre nonsense. If people can regard the Reserve Bank as independent, they can surely regard the directors of the Future Fund as independent since it was set up by the previous government with a charter to operate independently of government. As for the mum and dad investors crying they wuz robbed, thats the nature of the game and if they can’t handle the stock market perhaps they should stick to bonds or managed funds.

Don Clark says:

06:32pm | 15/09/09

Well, the likely Telstra split-up was certainly well-known and widely canvassed on the public record, and known to be on the agenda between Telstra and the Government since Trujillo’s replacement Thodey set about the necessary repair-job.

As for my own posts, if there’d been fewer wildly fact-free posts I’d have made fewer replies.  As for naivete and first hand kowledge, meh. Nice try. The phone call jibe may have been a tick colourful, but so what.

At the end of the day, the Future Fund has taken a prudent position with some of *our* money. Whether Telstra shares go up or down in the long term will depend on the success of whatever arrangement is adopted, for the telco and for broadband overall. In the long term. Its an investment, not a short-term gamble.

And for the medium term? I’ll make a different suggestion: Senator Fielding, who started this insider trading tosh, is almost certain to make another gaffe as silly or sillier before his time is up. Let us hope that it is on something as fleetingly unimportant.

Reg Davies says:

05:59pm | 15/09/09

Ha Ha Ha serves Telstra right, the way they sided with the ALP during the 07 election campaign. Just desserts enjoy!!!

Chase Stevens says:

05:58pm | 15/09/09

Isn’t the sepearating of Telstra into two different private entities a good thing for capitilism? Doesn’t this increase the ability of competitors to compete? I don’t see how this is socialism at all.

Richo says:

05:26pm | 15/09/09

One more issue that needs to be looked into is the so called truce between Stokes and Packer. One important little gem to be jettisoned by the government out of Telstra may well be it’s Foxtel shareholding. Who will benifit from Foxtel being forced out of Telstra? Not Telstra shareholders thats for sure. What information was passed on by people in the know about this last week?

simon says:

05:12pm | 15/09/09

Hmmmm… I wonder if the sale price of the Infrastructure half of Telstra may be slightly less than $43 Billion??

Michael says:

04:47pm | 15/09/09

Share holders of Telstra had plenty of chances to vote and change the direction of this failco, now the company is gunna get trashed, and you deserve it. Yes I’m smug, but hey, you share holders have profited from me and others being ripped off, so I think I have a right to feel smug that you’re getting some of your own back.

IC Krupt says:

04:47pm | 15/09/09

Tanner says “No Tip off” to the Future Fund??? Pigs a*se there wasn’t!! Insider Trading…and the government should be held to question.

Toddzilla says:

04:46pm | 15/09/09

The one thing that has been missed in this debate is that it is certain to increase, not decrease, prices. When Telstra divests its infrastructure assets into a separate holding company that operates at arm’s length from Telstra, the result will be increased prices for all Telstra customers, but won’t in any way decrease the prices for the other companies as all the infrastructure will still be owned by the one company.  Net result - higher prices for all (especially when you consider that Telstra will still have more customers and therefore can rightly seek an extra deduction in rental charges as is the right of a mass user of any commodity).

The next, more scary proposition, is where does the government go from here. How many other companies will it force to divest its interests because they are not in keeping with the socialist regime in Canberra? The arrogance of Rudd and his goons means that they are certain not to stop here. Next they will force coal companies to sell off their rail networks and land owners will be forced to sell their property for increased public housing. This government is a joke and needs to go. The next election can’t come quickly enough.

watto says:

04:38pm | 15/09/09

To Don Clark and his comments about the sell-down of Telstra shares - it is very rare to come across somebody with your naivety.  You clearly have no first hand knowledge of how things work in Government circles.

papachango says:

04:27pm | 15/09/09

Your comment:AJ - you’ve got a hide. Greens are always calling for investigations, massive regulations, and interference of anything that doesn’t fit with their ideology - basically anything to do with the private sector and free enterprise.

So why is it ‘needless interfering’ when another Senator questions something the government or an organisation does? I’m no fan of Fielding (especially since he is pro Internet censorship), but the Greens don’t have a monopoly on keeping the government honest you know.

Don you’re up to thirteen posts now. I think you’ve earned a good cuppa and a lie down

simon says:

04:06pm | 15/09/09

Don Clark says: Time for tea.

Thank Christ for that. Slip in a Valium would ya.

Anthony says:

03:58pm | 15/09/09

Had a look at them Don, all of them seem to be bankers! How was that supposed to make me feel better??? An OA does not stop bad corporate behaviour.

Don Clark says:

03:57pm | 15/09/09

Not indignant Sir, and not Spam. Just facts vs nonsense, as passed by The Punch moderators.

Time for tea.

papachango says:

03:55pm | 15/09/09

Speaking of hysterical, Don Clark, you’re being pretty bloody hysterical yourself in your over the top defence of the both the current Government and the Future Fund’s peachy clean integrity - you’ve devoted something like eleven posts at last count on the matter.

Do you have some kind of vested interest? Are you a staffer for either of them?

Don Clark says:

03:53pm | 15/09/09

And all from a poorly thought out pot-shot from Senator Fielding.

Be interesting to see the reaction of the Board. Enough to melt the telephone cable between the Chairman’s office and the Senator’s office, I’d reckon.

The apology from Senator Fielding tonight should be fascinating to watch.

simon says:

03:51pm | 15/09/09

Don Clark.

You spamming us with your indignation is growing tiresome.

AJ says:

03:40pm | 15/09/09

Honestly, I think the whole ‘insider trading’ thing, for people who actually note how the Future Fund is set up, is a stupid, stupid accusation to make.

HOWEVER, given the kerfuffle that idiots like Fielding are kicking up, it may be worth the Government encouraging an independent audit of the actions of the Future fund, and when that comes back saying that the process was clearly not insider trading, that’s another point for the government in the war against needless interference by the Family First Senator from Victoria.

And as a Green, I sincerely, sincerely hope that none of our Senators fall for this insider trading garbage.

And simon, don’t quote Hitler at me, it makes you look stupid, and it’s inaccurate.

Don Clark says:

03:34pm | 15/09/09

Absolutely, IanSand. Headless chookery in spades.  Just take a moment to look at the board members and their histories: http://www.futurefund.gov.au/about_the_future_fund/board_member_profiles

Please. I ask you. Honestly.

It’s just hysterical to suggest the 20 Aug trade was a bodge up. For God’s sake, the Future Fund still holds *11%* of Telstra shares. Why on earth would they ruin their reputations while still holding a full hand?

Its ludicrous. Fantasy.

pete m says:

03:30pm | 15/09/09

good comment iansand - I reckon a few $ on T shares for a nice short term gain is called for.  They pay nice dividends too.

Shinsengumi says:

03:24pm | 15/09/09

Bloody awesome!!  Finally Telstra will be forced to play fair.  Years and years of selling ‘wholesale’ access at higher prices than retail Telstra customers pay, and years of brutal monopolisation and price gouging, and finally what should have been done when Telstra was privatised has been done.

simon says:

03:21pm | 15/09/09

ML you need to brush up on your History of Germany pre WWII.

Paul says:

03:19pm | 15/09/09

Socialism! you got to be kidding,this smacks of Communism,the comrades who rule us will get the boot they deserve in 12 months.Will the comrades get their legislation passed in the Senate? Will Telstra challenge the legislation (if it’s passed in the Senate) in the High Court.Anyone who plays chess knows that the game is never won until ‘checkmate”.
The ruling Comrades (fools)in Canberra are gambling big stakes with our money.

iansand says:

03:16pm | 15/09/09

If the company is split it will most likely be hiving off an asset into a separate, publicly listed, vehicle.  It does not happen every day but it happens often enough that there are well settled principles for ensuring that it is fair.  Most likely it would be done as a scheme of arrangement under the Corporations Act.  That process involves an application to the Supreme or Federal Court, where the process will be scrutinised, followed by a meeting to obtain shareholder approval.  If the shareholders don’r approve the process goes no further.  After the shareholder meeting the process goes back to court for a final check.  At the end of the process the most likely outcme is that shareholders will own x shares in Telstra (Retail) Ltd and y shares in Telstra (Wholesale) Ltd.

As for the future fund, assuming (I don’t know) that there are joint directors,  you will just have to assume that those directors followed well established, and (in some cases legally mandated) processes for avoiding conflicts of interest.  That is making another assumption, which is that this announcement was known to the Telstra board, or the Future Fund board, before today.  If they did not follow those processes they should be hung out to dry, but I bet they are in the clear.

There is a fair bit of headless chookery going on here.

There is a degree of hysteria here.

simon says:

03:01pm | 15/09/09

The major financial asset fund designed to accumulate financial assets and invest them on behalf of the Australian Government dumps stock in Telstra scant weeks before the Australian Government sets about to cripple Telstra!!!

If thats not worthy of a full judicial inquiry, I don’t know what is?

The Magical Liopleurodon says:

02:59pm | 15/09/09

Oh Dear, Godwins law already? Doug comapring this to “Nazi Germany”? Simon qouting Adolf Hitler? Sorry guys, but when you start comparing things you disagree with to the Nazi’s, you automatically lose your argument.

Don Clark says:

02:58pm | 15/09/09

Madhu K:
The Government did not engage in inside trading. It could not, as it does not directly hold or sell Telstra shares. They are held in the Future Fund, run independent of the Government of the day since it was set up in 2006 by the previous Government.

The Future Fund Board, also appointed in 2006, makes its own independent market investment decisions in its own time, as already noted on the public record, Aug 20:

“The sell-down is in line with the Board’s previously stated plan to reduce the portfolio’s holding in Telstra in an orderly manner over the medium term and to build a portfolio consistent with its long term mandate and strategy.”
and
“The Board took the view that current market conditions were conducive to a partial sell-down of the holding.”
In full: http://www.thepunch.com.au/articles/cooperation-with-telstra-give-us-a-break/#comment-26118
Blind Freddy (and his dog) knew that a Telstra shake-up was possible. The insider trading story is a beat up, concocted by Senator Fielding without any evidence.

Metoxos says:

02:54pm | 15/09/09

Compensate those long-suffering poor mum and dad investors who were encouraged to buy Telstra shares by one government and are being screwed by another.  OK, you want to split the company.  Fine, compensate us cause we bought the shares with the understanding that it has x or y assets that will not be eroded by Government interference.  Surely there must be a case under the Constitution with which Telstra can take the Government to the High Court given shareholders have been screwed over this issue.  This is ludicrous.  Absolutely (dare I say it) UNAUSTRALIAN!  Fair crack of the whip, boss!

Luke says:

02:46pm | 15/09/09

The Future Fund board may well be independent of the government - this does not in itself rule out insider knowledge.  The government has a vested interest in the performance of the Future Fund.  ‘Future-gate’!

simon says:

02:37pm | 15/09/09

AJ it is Nationalism.
“A car for the people, an affordable Volkswagen, would bring great joy to the masses and the problems of building such a car must be faced with courage.”
- Adolf Hitler

Don Clark says:

02:35pm | 15/09/09

Here’s a thought.  This article was first posted on The Punch at 10:31 and included this passing remark
“...Neither is particularly appetising for existing shareholders. (The government, you may recall, just dumped a huge parcel of shares through the Future Fund.)”
No imputation there of dirty work, just a passing remark. Many a commentator has discussed for some very considerable time the likely breakup Telstra and the ups and downs of the share price.

Senator Fielding’s nonsense hit news.com online sources just over an hour later at 11:47.  What would you care to bet that Senator Fielding’s remarks are based *solely* on misunderstanding that one single sentence in the original article? 

The implication that the Board - all of them Howard goverment appointees -  is somehow made up of ALP puppets of the Labor government front bench, acting for base personal gain, is just quite ludicrous.  Pity Senator Fielding didn’t check first how the Future Fund and its board were made up.

Madhu K says:

02:30pm | 15/09/09

Can the Labour Government be sued for “Insider Trading”?  The Government sold a large chunk of its shareholding in Telstra before announcing today’s outrageous decision. Haven’t they made profit out of insider knowledge?  In the process ripped shareholders off? Let’s bring a class action.

AJ says:

02:29pm | 15/09/09

OK, a few things:

A responsible government tries through regulation to avoid the creation of natural monopolies that can then engage in price-gouging of essential services, as Telstra has attempted to do.  As such, this isn’t socialism, nor is it free-market capitalism, it’s a hybrid system like we’ve always had in this country, if you could stop watching Fox News, that’d be grand.

Telstra identified structural seperation as a risk at their last AGM, as such, investors who chose to stay shouldered that risk.  The fact that it could happen should have been factored into the price, and anyone who assumed that it couldn’t happen shouldn’t be investing in stocks.

As far as I’m aware, there’s no recourse through court action unless the legislation is deemed unconstitutional.

P says:

02:22pm | 15/09/09

Telstra was sold as a going concern!  Governments on both sides have benefited from the money from that sale, but it hasn’t stopped them trying to force Telstra into the structural change that they should have implemented before they sold the business.  Perhaps it’s time for the government to buy it back (at half price for what they sold it, I reckon 43 billion will do it easy now they have softened up the share price), then they can do what they like with the company.  But like all Socialists the bludgers want something for nothing!  Bring on the next election!!!

Doug says:

02:17pm | 15/09/09

Nazi Germany!! Do not shareholders have a say?

Anthony says:

02:15pm | 15/09/09

Didn’t the future fund dump shares?  is that legal? Venezuala here we come. How do you say banana republic in Mandarin?

simon says:

02:04pm | 15/09/09

I hope Telstra takes Conroy and this basterd government to court and whips the living shit outta them.
This sort of stand over tactics deserves a bloody nose.

Don Clark says:

02:01pm | 15/09/09

Books: thanks, knowledge advanced, two Chrisses who shoot from the hip, then.

Don Clark says:

01:57pm | 15/09/09

No, Sir, I’ll not give you a break.

The suggestion of Future Fund malfeasance is *without* foundation. It is nothing more than an bald assertion by Senator Fielding.

Check the facts.  Check the Board’s make-up. It is entirely independent of the Government of the day, as set up in *2006*, at arm’s length by the then Government. It is not a creature of any party.

Cannot take this guff seriously, really. It’s plain nonsense.

Chris says:

01:50pm | 15/09/09

Not me re book debate Don

Chris says:

01:46pm | 15/09/09

And today’s announcement wasn’t in the can three weeks ago Don? Give me a break.

Don Clark says:

01:44pm | 15/09/09

Post-script on Future Fund prior knowledge:

Where *does* this stuff come from?  From… no, no, go on, guess. You’ll never guess!

Senator Fielding. Yep, the Senator for Victoria, blissfully unaware of the Future Fund’s origins, make-up, Board and legislation, all enshrined by the previous Government.
http://www.news.com.au/business/story/0,27753,26076047-31037,00.html

Senator, sadly, yet another own goal. Please, do at least *try* to do some homework before your next outburst.

Socrates says:

01:39pm | 15/09/09

@Chris 13:22 - The Future Fund, which is completely independent from the government, was handed a very unbalanced (Telstra overweight) initial portfolio.  Their decision to sell down some of their Telstra holding was probably no more than a very proper and prudent attempt to rebalance their assets.

Don Clark says:

01:37pm | 15/09/09

Post-script:  Chris may be the same Chris who in the Book debate
http://www.thepunch.com.au/articles/book-debate-is-absurd-when-were-buying-them-overseas/
thinks the “UK postal service now impose VAT on all goods ordered overseas online” - on what basis, heaven knows as he didn’t say. But not so, either.

Patrick says:

01:37pm | 15/09/09

Brett K, that’s the risk you take when you invest in the sharemarket. Did you believe your share prices would just magically go up and up and up forever with no risk involved?

If you did, then may I suggest that the free market isn’t for you.

If this reform upset’s shareholders and their “dumb money” who invested in Telstra at the behest of the previous government (and investing at the behest of a government is *always* a stupid thing to do), and whose understanding of the market is that it just keeps going up and up continuosly with no downside risk, then so be it.

papachango says:

01:38pm | 15/09/09

I’m generally extremely anti any government meddling in the affairs of private or publicly listed companies, but subjecting Telstra to geniune free-market competition rather than the current ridiculous government pricing legislation wouldn’t be a bad thing. Even if it means my shares take a hit.

However I do NOT trust Conroy and the Rudd government to do it - I’d rather they left Telstra alone. Two Main concerns. Firstly, with this $42b fibre to the home network, it’s basically re-nationalisation by stealth, their plan is to cripple Telstra then replace it with their own network that will cost at least four times what a competitive private sector could do it for. We will all pay for this, either with higher ISP fees or higher taxes.

Secondly given Conroy’s obession with Iranian style censorship, this just smacks of an attempt to monopolise control of the Intenret in Australia, so he can censor at will. I wouldn’t put it past him to refuse wholesale access to ISPs unless they fully cooperate with the censorship.

Don Clark says:

01:34pm | 15/09/09

No, one does not.

One checks ones facts first. The only sale was that made three weeks ago, as noted.

Don Clark says:

01:29pm | 15/09/09

Sadly for Brett,  the Future Fund is independent of the elected government, as it should be.

Created in 2006 by the previous Government, the Board is responsible for deciding how to manage its fund and investments.  The members were selected in 2006…and here they all are, judge their qualities for yourselves
http://www.futurefund.gov.au/about_the_future_fund/board_member_profiles

As for the funds as $:
“money may not be withdrawn from the Future Fund until 2020 except for the purpose of meeting operating costs or unless the Future Fund’s balance exceeds the target asset level as defined by the Future Fund Act”.
http://www.futurefund.gov.au/about_the_future_fund/outline

Richard says:

01:26pm | 15/09/09

About time, it was ridiculous to keep Telstra as both a wholesaler and retailer. The boards duty is to maximise returns to shareholders, not to play fair, and now there will be two boards each pursuing their best interest, which is competitive capitalism. Maybe now we will see our broadband improve, we have amongst the worst service and prices in the world thanks to Telstra.

Chris says:

01:22pm | 15/09/09

The point here Don is anyone dumping large parcels of shares prior to a substantial announcement like this immediately attracts the interest of ASIC. Why should this be any different given the FF Board view that current market conditions were conducive a few weeks ago? Does one take this to mean the FF saw market conditions at their highest point for Telstra given their prior knowledge of today’s news?

Don Clark says:

01:20pm | 15/09/09

Oops. Finger trouble!
Future Fund announcement missing link
http://www.futurefund.gov.au/__data/assets/pdf_file/0003/3396/Telstra_sell-down_media_release_FINAL_200809.pdf

Bloody communists, wanting to profit from the free market. I ask you!

Brett K says:

01:18pm | 15/09/09

I suggest that Kevin and Co defer an election for as long as they can.
Shareholders have been through enough with the share collapse because of the GFC.
We didn’t need Rudd and co to pour fuel on the fire.
But governments don’t care a hoot.  Their massive super payouts won’t be affected. We’ll just be slugged more to ensure the Canberra cacklers continue to receive huge benefits on top of their already massive perks.
They offload their future fund shares and tell us officially later! No wonder the reputation of pollies is the bottom of the barrel.

It doesn’t matter what your political persuasion is, none of them is worth a bumper.  They’re there for themselves, not constituents.

And then they have the temerity to fine people who can’t be bothered voting for them.

Andrew says:

01:16pm | 15/09/09

Even Milton Friedman, the loud voice of extreme liberal capitalism, once said he believed the only thing worse than a government monopoly was a private one. The last government were genuinely foolish not to attempt structural separation before privatising Telstra. What some in the business world forget is it was our money, taxpayers’ money, that built these assets in the first place.

Don Clark says:

01:07pm | 15/09/09

Future Fund? “clearly had prior knowledge”? Oh please.

A prudent board, making moves on its own cautious assessment, three weeks ago.  Already on the public record.

“The sell-down is in line with the Board’s previously stated plan to reduce the portfolio’s holding in Telstra in an orderly manner over the medium term and to build a portfolio consistent with its long term mandate and strategy.”
and
“The Board took the view that current market conditions were conducive to a partial sell-down of the holding.”
In full: http://www.thepunch.com.au/articles/cooperation-with-telstra-give-us-a-break/#comment-26118

Tim says:

01:04pm | 15/09/09

Good to see that something is being done to create some true competition in the telecommunication market - Telstra is a private company that continues to function as if it were a state-run monopoly. Splitting Telstra may have other advantages too - for a number of years there has been on and off discussion of a single Australia-NZ communication market, but Telstra in its current form, whilst supporting such a move, has been an impediment. A single market could lead to the end of international rate calls across the Tasman, no more international roaming charges etc. saving people on both sides of the ditch tens of millions of dollars every year, but, of course, this would not be possible whilst Telstra remains an uncompetitive monopoly in Australia giving it an advantage over competitors from both Australia and NZ.

Socrates says:

01:03pm | 15/09/09

It seems that at last the present government may reverse the bad mistakes made by various earlier ones.

These happened when they agreed to put all the services into Telstra, and then later flogged off the monopoly 300kg gorilla to bedevil us with uncompetitive arrogance ever since.

Optus says:

01:02pm | 15/09/09

The last one of the tall poppy syndrome Australia likes committing on itself . Good luck with the future Australia you need it.

TimT says:

12:58pm | 15/09/09

Breaking up Telstra - good. But breaking up Telstra in order to ensure that no competition is offered for another Government-controlled communications scheme (the NBN)? Bad, bad, bad.

Telstra used to be a government-controlled telecommunications monopoly, and that’s where all its problems began. It was never subjected to competition, and isn’t inclined to accept competition now.

Conroy proposes we replace the Telstra monopoly with a new broadband monopoly.

It’s going to create a lot of work for government and bureaucrats, but will not leave Australians much better off at the end of the day.

Chris says:

12:56pm | 15/09/09

I agree with Michael Duffy. Telstra is down 16 cents today. The FF clearly had prior knowledge of a price sensitive announcement and dumped shares accordingly.

jack says:

12:55pm | 15/09/09

Who didn’t see this coming? If you are a shareholder (still) then it’s your own stupid fault. This has been on the cards for years. The shareholders are as delusionsal as old Sol was. Wake up.

Patrick says:

12:46pm | 15/09/09

Chuckle at whyisitso’s comment. Do you even know what Socialism is? Or do you just watch fox news or some trash like that, or hear what they are saying over in the US and mimic it here?

This is the government breaking up the anticompetitive monopoly on the telecommunications industry that is Telstra, allowing for greater competition in that market and thus better services and prices for us consumers. All in all, a rather capitalist measure.

James K says:

12:41pm | 15/09/09

I bet there will be two kinds of comments on this issue: People who are anti the idea and people that are pro.

Who wants to be there is a major corrolation between shareholders (Who will lose a ton of money) and non-shareholders who want to see a corporate villian crushed.

Oh, and Michael (11:14) - Telstra is a private company, here in Australia (Not Europe) Companies are supposed to look after SHAREHOLDERS, not Consumers.

Eric Mack says:

12:41pm | 15/09/09

Privatizing Telstra was patently stupid from the outset.  For ideological fashion and a fist of dollars the Commonwealth abandoned the vital single national communications system - right on the eve of the Communications century.  Now it proposes to abandon and screw those it sold Telstra to.  Henceforth Anyone would be mad to take up any other Government “offer” henceforth!  Apparently Governments now can spend $billions propping up big corporations (especially if they’re foreign, like Gorgon or the car-makers), but Lord help any private Ozzie shareholders caught in their webs.

Michael Duffy says:

12:33pm | 15/09/09

If the government owned Future Fund knew this was going to happen when they dumped their shares then this may be insider trading on a grand scale.  ASIC should investigate.

james says:

12:15pm | 15/09/09

It’s not about what’s cheapest, Biggs. If you’ve been paying attention at all you may have noticed that it’s about Building the Future.
Having a reliable, high quality network now, means that it will last longer and be easier to build upon as technologies continue to advance.

At any rate, the government didn’t lock Telstra out of the tender process.  They locked themselves out.

Telstra offered only an eighty percent coverage, eighteen percent under the required coverage, and asked for the price to be a “concessional” loan - the implication of a repayment resulting in complete ownership by Telstra.

Peter says:

12:10pm | 15/09/09

Interesting - perhaps it should have been clarified that Telstra is ALREADY functionally separated! The company is ALREADY split into two separate divisions - wholesale and retail. The Retail division ALREADY is subject to paying the same rates to Wholesale as Optus, AAPT, etc etc. If you look at what has been done overseas with structural separation, it has been an absolute disaster, and their networks are a long way behind. Australia has the best and fastest mobile network in the world, it has amongst the best broadband in the world (including the fastest wireless network and they’re going to switch on 100 Mbps cable in the near future). Who provides all this? Telstra. None of the other networks come close, so why would we abandon a model that works, to go to a model that has not worked overseas? Typical Australian government - doesn’t matter if it’s labour or liberal, they all want the same thing, and it’s not the right thing.

Stephen says:

12:08pm | 15/09/09

What is all this talk about competition?  There are no Telcos in Australia competing against Telstra.  Competition, in my books, is not simply cherrypicking the lucrative markets with minimal investment.  Most of you should take a step out of a state capital and see how far the competition goes. None of them want to invest and now the taxpayer will foot the bill. It’s a joke.

den of Hawthorn says:

12:06pm | 15/09/09

Martin you have no idea…and obviously no telstra shares…stop your smugness

Sam says:

12:01pm | 15/09/09

This is long overdue – something that ought to be done when it was first privatised. Australia has too many big monsters – like the Big Four in banking, the Big Two in supermarket, .....

watto says:

11:54am | 15/09/09

What a coincidence - the Future Fund dumps a huge pile of Telstra shares just before the Government announces that it is going to smash the company!!  Will the ACCC be instigating an insider trading investigation??

Richo says:

11:47am | 15/09/09

I am concerned that a major shareholder in Telstra may have had privileged information that was not readily available to the general community. Recently the Future Fund off loaded a sizeable portion of its shares in Telstra. In light of the announcement made today from the Federal Government I find it interesting that there maybe be a conflict of interest between the government and the Future Fund. Considering the effect this announcement today has on the value of Telstra I think it would be prudent to reassure the public that the Government is not operating in a manner which is illegal.

Alexander Biggs says:

11:48am | 15/09/09

This does raise the issue: which is the cheapest way to provide broad band internet and telephony across the nation, fibre optic or 3g wireless? Much of both already exist. We should not let the Rudd government’s NBN, produced to win an election, muddy the waters. If it is cheaper to build on Telstra’s Next G network, rather than thousands of km of fibre, that is the way to go.

Steve says:

11:20am | 15/09/09

Socialism! Are you serious whyisitso?  Where is this nationalisation you speak of?  This is capitalism at its best!  The government is ensuring that Telstra can no longer engage in anticompetitive behaviour.  The government is actually making sure that competition will be fair for all the players in the market.  I suggest you stop the ‘reds under the bed’ nonsense.

Michael says:

11:14am | 15/09/09

This looks like the push that Telstra need to start acting in the interest of consumers and drive a telecommunications market with real competition. Realistically this structure should have been imposed years ago. Compared to the consumers who stand to benifit from this Telstra shreholders are a vast minority…

whyisitso says:

11:08am | 15/09/09

This is outright socialism.  Companies throughout the economy are now on warning that if they oppose or resist this red government’s wishes, they run the great risk of nationalisation.  In November, the Australian voters knowingly voted for the introduction of communism.  Ben Chifley will be chuckling in his grave.

pc says:

11:03am | 15/09/09

Oh Clive, yes, lets cut to the chase. Telstra, though they lost their greatest asset Sol Trujilio, are the uncooperative ones. I recall it was they that refused to make a submission on the National Broadband network. This is because like many large companies that use infrastructure built by the taxpayer, they are cheapskates. They believe they can pressure the government into building infrastructure that they can then make a lot of money out of, for free. Throughout the late 90’s I heard talk of a super information highway. Now our government looks like they might actually build it. Surely thats something to applaud. The public and shareholders have been wise to Telstra’s game for some time. Maybe its time for you to wise up too.

Metoxos says:

11:02am | 15/09/09

This is a disgrace.  Wait for the electoral backlash.  Mum and dad’s who bought shares under the previous gobvernment on the proviso that it will remain the same company will unleash hell at the ballot box.

Martin says:

10:54am | 15/09/09

Good job - sounds like a good plan - and this is what should have been done when it was first privatised.

Jonesy says:

10:54am | 15/09/09

Dump the shares and then announce this. If a CEO of a company did the same thing the Labour party would be having a fit.