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SYDNEY: The Australian government is likely to assemble four separate panels of banks to handle the sale of its remaining A$27bn (US$20.2bn) stake in Telstra, the country's dominant telecoms company, it said recently.
The decision means most of the banks lobbying for a role in the privatisation of "T3" can expect a share of the expected A$100m in fees.
The beauty parade for choosing which investment banks will work on the sale, which will possibly be the world's largest ever equity offering, concluded in Canberra recently when officials from the finance department held final talks with lobbyists from the investment banks. The government is expected to announce the victors in mid-November.
To achieve maximum flexibility for a sale, Nick Minchin, telecoms minister, is expected to choose up to four banks to be joint global co-ordinators and project managers. Those tipped to win these mandates, the most lucrative, include UBS, Goldman Sachs and Macquarie Bank.
However, Mr Minchin is also considering appointing a panel of banks to sell equities in a book-building exercise to global institutional investors.
Other banks are likely to be appointed to focus on the full market offering to domestic investors, with a fourth tier of banks focused on creating and selling hybrid debt products, such as convertible bonds, to overseas investors.
Ian Smith, the government's Telstra spokesman, said it would be prudent for the government to keep its options open by retaining a large number of banks for different purposes.
"The market might change over the next 12 months and the government wants to retain maximum flexibility should the sale occur next year," he added.
The government is hoping fully to privatise Telstra by the end of next year, although it will make a final decision in March. It has refused to set a target price for the sale, mindful that domestic investors are nursing heavy losses on Telstra stock they own.
Meanwhile, a former Telstra executive lately added to the political controversy surrounding the sale by claiming that privatisation would lead to a reduction in the quality of services to rural parts of Australia.
Gavin Priestley, who until recently was general manager for the majority of rural services in the state of New South Wales, told a radio station that he feared a privatised Telstra would find it uneconomical to provide modern broadband and data services to the bush.
Mr Priestley claimed his concerns were shared by many executives at the company.
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