Fed: PM bows to the inevitable on Telstra: Dems

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Fed: PM bows to the inevitable on Telstra: Dems

CANBERRA, Nov 27 AAP - The Australian Democrats say Prime Minister John Howard hasfinally bowed to the inevitable and abandoned any plans to sell off Telstra in the nearfuture.

Mr Howard yesterday ruled out any immediate move to sell off the rest of Telstra asthe telco's share price plummeted to fresh five-year lows.

With Treasurer Peter Costello expected to shelve Telstra's sale in today's mid-yearBudget statement, Mr Howard admitted the government would not get a decent price if thetelco was sold anytime soon.

But he said long-term it would absurd for Telstra to remain part-government owned.

Telstra shares fell to new five-year closing lows as Mr Howard made the comments, with51 million shares changing hands to finish six cents weaker at $4.38, a level not seensince December 1997.

Democrats communications spokesman John Cherry said Mr Howard had finally bowed tothe realities of the market and Senate opposition to the sale.

"Our prime minister is a great reader of public opinion and the public is so firmlyopposed to the sale, and I think that opposition has been strengthening in recent weeksrather than abating," Senator Cherry said.

He said any sale would cost taxpayers more than $1 billion in lost dividends.

The public had also been shortchanged in the T1 sale, which was sold too cheaply, whileshareholders paid too much in T2, he said.

Mr Howard said in order to sell the government's remaining 50.1 per cent stake in Telstra,he had to be satisfied that phone and internet services in the bush were up to scratch.

He would then need to overcome opposition in the Senate to the sale and be satisfiedthe government would get a good price for its remaining stake, which could be up to $35billion.

At current levels the government might only raise $20-$25 billion, well short of thelevels outlined in the May Budget.

AAP rft/hu/sb

KEYWORD: TELSTRA DAYLEAD