Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Administration, Senator Minchin. With the Telstra sale retail offer closing today, will the minister update the Senate on the progress of the sale?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I thank Senator Eggleston for his question. As Senator Eggleston said, the retail offer stage of the Telstra sale does close today, 9 November. This means that we are at the three-quarter mark of T3. I can report to the Senate that the sale is progressing very satisfactorily. Senators are aware that the government announced in August that we would sell around $8 billion of our shares and that we would place the rest of our shares in the Future Fund for the fund to sell down in an orderly fashion after a two-year escrow period. I point out to the Senate that this $8 billion offer is substantial. It is the biggest share offer in Australia since 1999 and the biggest telco offering in the world since 2004.

We are conducting this sale in four stages. The first stage involved stockbrokers and financial planners purchasing stock on behalf of their clients. That stage went extremely well, with more than half the shares on offer—over $4 billion of stock—being allocated. The second stage involved the sale of stock to Japanese retail investors, where the yield on T3 shares is particularly attractive. Over $400 million of shares were sold in Japan. The retail offer has been open for the past 2½ weeks and it is an opportunity for ordinary retail investors to apply for shares. It is obviously an opportunity for us to recognise existing Telstra shareholders by giving them a larger minimum entitlement to stock. Over the first two weeks we saw a steady flow of applications but in the last three days we have witnessed a surge of applications for shares from individual investors. With the offer closing today, we expect to receive a large number of applications. We expect that, by the end of today, we will have already exceeded our $8 billion target over the first three stages of the sale.

Next week we move into the fourth and final stage of the process, the institutional offer, where investment funds and superannuation funds bid for stock. This institutional offer will open next Wednesday and close next Friday. The government will increase the size of the T3 offer to meet the demand from institutional shareholders in Telstra who also want to buy their minimum guaranteed entitlement. This is subject, of course, to those investors offering to buy the shares at the price that is ultimately set by the government for the T3 share offer. We will not know exactly how many shares are being sought by institutional shareholders on this basis until the close of the institutional offer next week.

The government also has the right to make a limited number of shares available to other institutional investors at the final price. However, the government is not focused on maximising the size of the offer; in fact, there are good reasons to prefer that a number of those investors buy shares on the market rather than meeting their demand fully in T3. That is because we are quite explicitly focused on having an orderly aftermarket in Telstra stocks.

In closing, I take this opportunity to thank the Department of Finance and Administration, all of our sale advisers and particularly the Telstra team and their roadshow for their work to date in making this sale what to this stage has been a success. I do want to thank all those Australians who are participating in T3 and welcome their interest in being part of this great Australian company.