NEW YORK-Despite recent volatility in the equities markets and lawsuits against it by six competing carriers, Telstra, Australia’s largest telecommunications company, apparently still plans to proceed by mid-November with its initial public stock offering.
Besides its wireline business, Telstra operates Telstra Mobilenet, one of three incumbent cellular carriers in the country. The others are Optus and Vodafone plc. Cellular customers in Australia number about 4.6 million, and the three incumbents have a combined penetration rate of 25 percent.
Telstra also has begun commercial rollout of Northern Telecom Inc.’s Proximity I fixed wireless access solutions throughout rural parts of Australia under a multimillion-dollar supply agreement.
In a partial privatization of Telstra, the Australian government has put up one-third of the carrier for sale. The government anticipates raising more than $10.2 billion through the public offer of 4.3 billion shares of stock in the company.
Demand already has exceeded by at least 1 billion the number of shares on offer, 70 percent of which will be sold in Australia, the rest in Asia, Europe and the United States.
The expected proceeds are more than 60 percent greater than they were when the one-third stake of Telstra was valued early last year but lower than many analysts have valued the company.
Meanwhile, what would be Australia’s largest stock sale is weathering cross-currents of recent gyrations in the world’s equities markets, political finger pointing and lawsuits against it by competitors.
The Australian Broadcasting Co. reported Oct. 29, “the federal government has accused the Opposition (party) of trying to undermine the sale of Telstra. The Opposition has called for the sale to be deferred following the stock market turmoil.”
Tim Fischer, acting Prime Minister, is reported to have said, “It is far too early to say what all the ramifications will be arising from what may be termed `Red October 1997′.”
In the legal arena, Optus Communications, which is itself planning a $619 million equity offering, filed a federal lawsuit against Telstra in September alleging, “the company had employed a strategy of anti-competitive behavior to protect its monopoly in the local call market,” The Australian reported.
“Telstra will carry up to $1.45 billion of contingent legal liabilities on to the share market when it lists in November after Optus yesterday became the (sixth and) latest Telstra rival to lodge a damages claim against the giant carrier,” the newspaper said.
Last month, the Australian Broadcasting Co. reported that Frank Blount, chief executive of Telstra, said of the legal actions, “What you are seeing is early growing pains of people feeling their way around what does it mean to be self-regulated and what are the powers of the [Australian Competition and Consumer Commission] and others and how do we deal with them.”
The telecommunications industry in Australia was opened to full competition July 1. The Australian Communications Authority plans to auction spectrum in the 1.8 GHz and 800 MHz bands next year.
