SYDNEY, Australia (Reuters) — The Australian Government said Monday it would sell 2.15 billion shares in Australia’s top telecommunications company, Telstra Corp Ltd. in two instalments, planning to raise about A$8 billion ($6 billion).
Retail investors will pay A$2.00 per share in the first instalment, including a 10 cent discount on the institutional offer price of A$2.10.
The price for the second instalment will be set through an institutional bookbuilding.
The government in August announced it would sell about A$8 billion of its 51.8 percent stake in Telstra — its third public offering in the group.
Telstra shares were trading up around 0.8 percent at A$3.86 on Monday.
On Friday, Telstra cut its long-term earnings forecast on Friday due to increased costs.
It said earnings before interest, tax depreciation and amortization would grow at a rate of 2 percent to 2.5 percent a year through to fiscal 2010, compared to a forecast last November for growth of 3-5 percent.
The company said costs were expected to grow by 2 to 3 percent a year over the period, compared to a flat forecast previously, as its decision not to build a fiber optic network would remove potential savings from replacing copper lines.
But it said plans unveiled last November to transform the company were on or ahead of budget and schedule, and it launched a new high-speed mobile broadband network, ahead of its target for start-up by the beginning of 2007.
Telstra’s Chief Executive Sol Trujillo, who took over the top job on July 1 2005, outlined a five-year plan last November to drive more revenue from new products and transform the company, including axing up to 12,000 jobs and overhauling its networks.
“We are on or ahead of budget and delivery schedule,” Trujillo said in a statement Friday.
The company, which in August posted a 26 percent drop in annual net profit to its lowest in eight years, has abandoned plans to build a A$3.1 billion high-speed, fiber optic network because it could not agree with the regulator over costs.
Telstra shares have fallen about a third since a March 2005 high of A$5.50 and are well below their record high of A$9.20 in February 1999.