As around a dozen banks bid to carry out the study that will recommend the best way that the Australian authorities can dispose of their remaining stake in national telco Telstra, reports are speculating that the so-called T3 sell-off could be the world's largest equity offering to date. If the stake is sold in one lump the sum involved could be bigger even than the US$18bn raised when NTT DoCoMo listed in 1998. Bank bids to carry out the initial sell-off 'scoping' study are expected to close this month, with the study itself scheduled for completion by mid-year. The sale itself is not anticipated until 2006. The government sold its 48.2% holding in Telstra in two trances in 1997 and 1999.

Whether Telstra T3 is what the markets apparently think it's worth is moot. Although it remains the dominant force in Australia, with some 65% overall market share and 45% of the Australian mobile market share (figures published 2004), competition from the likes of AAPT, Hutchison, Optus and Vodafone (but not in that order) has been increasing. The telco's performance in recent years has lacked sparkle, and some major overseas investments have soured. Late last year it was announced that Telstra ceo Dr Ziggy Switkowski would be stepping down on 01 July 2005, or earlier if a replacement is found before then - two years ahead of the expiry of his seven year contract (click here).

Part of the challenge facing Switkowski's successor is that he or she will inherit a rather sprawling business that extends from utility universal service PSTN provider through shareholder in the Foxtel pay TV business to the Sensis directory and media concern. There are believed to be sharp internal differences of opinion about the direction in which the group should now develop.

On the upside, last month Telstra described its first half results as 'strong', with revenue growth of 5.1% to A$11.4bn and net profit after tax of A$2.337bn, up 1.9%. Underlying EBIT growth was 5.9% to A$3.7bn compared with the corresponding period, and EBITDA growth was 4.3% to A$5.5bn. Switkowski said the result was particularly pleasing as it meant the company had hit its target revenue growth rate, of between four and five percent, more than a year earlier than was previously foreshadowed while maintaining margins, and that its total industry market share had held steady for the first time since competition was introduced in Australia.
John Williamson