Australia still undecided on Telstra sale

Despite holding a meeting early Tuesday, Australia’s cabinet has yet to decide what to do with the government’s 51.8 per cent majority holding in incumbent carrier Telstra.

“The matter remains under consideration,” is the only word from the government, which had been widely expected to deliver a decision. Shares in the company slid a further 1.7 per cent on the news, languishing around the A$3.45 (£1.38) mark, the lowest yet.

However there was some light at the end of the tunnel. On Monday Telstra’s board announced revised guidance on financial outlook, confirming plans to declare ordinary dividends for the fiscal 2007 year. A pledge that is expected to bolster the A$25bn government stake sale.

However the company was also forced to downwardly revise guidance on growth following last weeks regulatory decision on unbundled local loop (ULL) pricing.

Telstra has long fought with the authorities over pricing and regulation, an attitude that has put the government’s planned 51.8 per cent stake sale in the company in increasing jeopardy.

Telstra chief Sol Trujillo last week took the opportunity to blast the competition commission for “mandating competitors’ below cost access to our fixed line network”.

The company has also abandoned its A$4bn fibre network after a dispute over pricing with the competition regulator. The state run operator scrapped the project after reportedly failing to reach an agreement on how much it would charge rivals to access the high speed network.

Telstra’s revised fiscal 2007 outlook forecasts revenue growth of 1.5 to 2 per cent, EBIT growth of plus 2 to plus 4 per cent and operating cash capital expenditure of between A$5.4 and A$5.7bn.