So much has already been written about T3 that I am going to gloss over a lot. Also please note that my numbers and dates are often forward looking and loose (rooloose) numbers.
Using a common measure – the Price to Earnings Ratio (PE) – this offer (T3 PE 15) is a lower PE (better) purchase than both (T1 PE 25) & (T2 PE 27).
There are some good reasons for this, and the main reason is outlined by The Minister for Finance & Administration Nick Minchin in his letter to Investors on P.4 of the Prospectus.
The paragraph of interest reads thus:-
Telstra shares not sold under the T3 Share offer will be transfered by the Commonwealth to the Future Fund – an investment fund established to strengthen the Commonwealth’s finances over the long term by providing for unfunded superannuation liabilities.
It is the GOV intention that the Future Fund will manage its Telstra shareholding at arm’s length from the GOV and, after an escrow period of two years, will be required to sell down the shares over time and reinvest the proceeds.
In accordance with this policy, the GOV does not intend to direct the voting of Telstra shares held by the Future Fund. In this way, the GOV will resolve its conflict of interest as both regulator and majority shareholder and majority shareholder of Telstra.
T3 offers a high fully franked dividend stream, in the medium term (two years) anyway. I believe this is designed to be especially attractive to superannuation funds, including self managed super funds, for reasons of super tax breaks.
GOV numbers from its asset sales task force indicate that a million of Australia’s 7.5 million households would buy into T3.
If we include underwater T2 households that would be a lot of potential protest votes against the LIBS if T3 fails to excite! This is another reason why T3 is better priced.
The Lib GOV must be so concerned about looking after their re-election prospects that they have announced that they will vote the GOV shares to appoint Mr Geoff Cousins to the Telstra Board.
We can hardly call Geoff an independent director, so we will just call him one of Jack Boot Johnny’s Henchmen.
Geoff, if appointed, might even beat Piers Akerman for Dr Stone’s DOLE BLUDGER of the year award next year!
Unannounced as yet is the often mooted ‘break-up Telstra’ card.
Holding two or more bits of paper might be worth more than one Telstra share?
Shares in the past, see Telstra the tax.
Half of Null.