Word: telstra
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Like many Australian mums and dads, my wife and I bought shares (O.K., installment receipts) when local telco monopoly Telstra was first offered to the public in 1997. A few years later, with our second child on board, we bought more shares when a further slab of the company was privatized in the so-called T2 offer. Australians were then still relatively new to direct share ownership, once the preserve of the wealthy. The stock market was buoyant, especially the technology and telecommunication sectors. If there was any qualm about the wider economy ("a miracle economy" after sailing through...
...early years, the price of Telstra was caught up in the speculative mood of the time; those clever enough to have bought in on the ground floor felt particularly wise, confident of their stock-picking skills. Considering the T1 offering (priced at $3.30), the best piece of advice that came my way was from a revered political commentator. Cutting through the financial claptrap with the elegance of a boy apparatchik, he suggested that because so many voters would become Telstra owners, the stock's price would always be politically sensitive. Hence, governments would provide the dominant player with a favorable...
...Howard government was new to this majority owner/regulator caper. Still, there was no reason to think it would not learn to cater to its new share-owning constituency. Today, around 1 in 9 voters is a Telstra shareholder; it's a broad group, to be sure, but like a majority of asset-rich Australians, these T-people tend to vote for the John Howard?led Coalition. Just last week, a survey by Roy Morgan Research showed that the government has very strong support among its joint-venture partners in the telco: 71% of Telstra shareholders surveyed supported the Howard government...
...over time, the idea that the price of Telstra shares was a political albatross, or that the regulators would rig the game to the company's advantage, has been put to rest. The world has changed?for Telstra and its competitors, investors and Canberra. Voters have wised up. Australians have now lived through a decent cycle of asset-market turbulence (even though gross domestic product has been expanding for 15 years). Says one government adviser: "House prices are the key to how Australian voters feel about their wealth. Full stop." Among existing homeowners, only those who bought late...
...people haven't fully absorbed that the political rules have changed on Telstra, including those hard-driving executives who run the company. Since he arrived last year, chief executive Sol Trujillo has participated in a flamboyant campaign against the regulator, the Australian Competition and Consumer Commission; senior ministers are in thrall, if that's the right word, to his charm, moxie and talent to infuriate. Trujillo, however, is doing what he was hired to do: get the best deals possible for Telstra shareholders, hurt the competition and revamp the company for growth. The market has yet to applaud his efforts...