| To: John McDonald who started this subject | 10/16/2000 10:50:12 PM | | From: ms.smartest.person | of 4541 | | | Telstra seeks a third partner
By Christine Lacy with Nicole Lindsay
2000-10-17 02:43:43
Telstra Corp and its Asian partner, Pacific Century CyberWorks, are poised to bring in a US carrier as a third partner to their $US10 billion global telecommunications infrastructure venture.
The advanced negotiations came as Telstra instalment receipts staged a late rally on their final day of trading, but left investors facing a paper loss of $1.34 a share, or 18 per cent.
T2 receipts closed up 19¢ at $3.02, while Telstra shares gained 11¢ to $6.06 after a positive reaction to the revised terms of the $US1.8 billion PCCW deal.
Hong Kong-based PCCW confirmed it was in "advanced" talks with an international carrier to strengthen the global reach of the cable infrastructure venture.
Speculation centred on the entrance of US giant AT&T into the Telstra-PCCW 50:50 infrastructure venture, whose strength lies in Asia.
The bounce in T2 receipts came on the last day for investors to sell their receipts to avoid the November 2 payment deadline for the final instalment of $2.90 a share. Investors paid $4.50 for the first T2 instalment, making an investment of $7.40 a share compared with $6.06 for Telstra shares at the close of trading.
The Minister for Communications Senator Richard Alston, yesterday defended the performance of T2 shares, saying it was a long-term investment proposition.
"I think there is a lot happening that will ensure that Telstra remains a very important company for Australia and therefore a good investment opportunity," he said. "The reworking of the PCCW deal is something [investors] would find heartening.
"Telstra's share price has actually held up very well by comparison with other telcos around the world."
But the Treasurer, Mr Peter Costello, declined to give a similar endorsement.
"I'm not sure that we're entitled to give out advice," he said. "Somebody's liable to say to me if I do I should have a dealer's licence, so I'd better be very careful.
"The important thing, I think, is to give Australians an opportunity to invest in their country and invest in Telstra and that's what the Government wants to do."
T2 turnover on the final day topped 55.8 million receipts in trading dominated by institutional brokers. ABN Amro led the way with 40 per cent of the trade in T1 and 45 per cent of T2 turnover.
Commonwealth Securities equities analyst Ms Caroline Egan said the last day of trade was primarily institutions weighing back into Telstra on the strength of the fresh alliance with PCCW and the healthy performance of the wider telco sector offshore on Friday.
"Retail investors had made up their mind some time ago to take advantage of other products out there," she said.
CommSec reported significant interest in the range of derivative products on the market to defer payment of the final instalment of $2.90 a share for investors who bought at the float and $3.05 for those who bought on market and institutions.
Meanwhile, a PCCW spokeswoman said it and Telstra were "looking quite seriously and were quite far down the track on the talks" with a third player.
PCCW executive director Ms Rebecca Leung told Bloomberg that the company was "talking to one of the top five telecommunications companies in the US".
A third participant would boost the firepower of the infrastructure alliance, which will begin life with $US500 million to spend. It is believed that the bulk of that funding is already committed to extending the reach of the internet protocol backbone.
The internet protocol backbone business, boasting underwater cable and Hong Kong's asymmetrical digital subscriber line, will allow the high-speed delivery of data throughout the region. Its revenues from day one are estimated at $US1.7 billion ($2.84 billion), as the world's second-biggest carrier of data.
Market analysts yesterday continued their detailed assessment of the wider deal's fresh terms. But most stopped short of upgrading their recommendation on the Australian carrier.
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This story was found at: afr.com.au  |
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