T3 Blitz Pays Dividends

The Age

Monday November 13, 2006

By MARC MONCRIEF

THE Federal Government's T3 advertising blitz aimed at mums and dads has paid off, with applications received for 2.5 billion Telstra shares worth almost $10 billion.

Finance Minister Nick Minchin said demand for new Telstra shares had exceeded expectations by almost 25 per cent, even before investment banks bid for their cut.

The Government had set a target of $8 billion for the total sale, but will increase the number of shares on offer to meet demand. "We saw a significant increase in the number of applications during the last days of the retail offer, bringing total retail demand through individual applications, broker firm and the Japanese retail offer to around 2.5 billion shares, which more than covers the initial base offer size," Mr Minchin said.

But the interest could be overshadowed at Telstra's annual meeting tomorrow in Melbourne by a showdown between the board and the Government over the election of the Prime Minister's former adviser, Geoff Cousins, as a director.

The board also faces a protest vote from shareholders after corporate governance advisers urged them to oppose Telstra's remuneration report, which fails to include details of secret executive incentive arrangements.

The Government targeted retail investors with a $20 million advertising campaign that was criticised because it did not warn punters to seek professional investment advice.

Applications from more than 320,000 individual investors in Australia and New Zealand accounted for 1.3 billion of the shares demanded.

In previous stages of the sale, 1.1 billion shares had been earmarked for stockbrokers and financial planners and another 120 million for Japanese investors.

When the Australian Stock Exchange closed on Friday, Telstra shares were $3.92, giving a price of $9.8 billion for all the shares asked for so far.

The final price, however, will not be known for a week.

The process called book build, in which institutional investors bid for differently sized packets of the stock, will determine the final price for all shares.

Retail investors paid $2 a share with their applications - a discount to the $2.10 application price for institutions - and can get an additional discount if they pay the final instalment, under certain conditions, by March 31, 2008.

© 2006 The Age

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