Sol's flash pad

By MALCOLM FARR and DORA TSAVDARIDIS

September 08, 2005

TELSTRA boss Sol Trujillo has taken time out from running the troubled telco to hunt for a plush Mosman hacienda.

As shareholders vented their frustration over a "war of words" that has sent their investments tumbling, the Mexican-American boss was casting an eye around this $4000-a-week waterfront mansion in Burran Ave, once owned by failed HIH chief Ray Williams.

Shareholders, many of them mum and dad investors, are furious, saying they are innocent victims of the tussle between Telstra and the Government ahead of the telco's proposed sell-off.

In the past 10 weeks, Telstra's market value has plunged by close to $1 billion a week, or 15 per cent.

Australian Shareholders Association CEO Stuart Wilson said: "We are having this incredible war of words between senior management and Government officials and it's only hurting one group of people shareholders.

"We have spoken to many Telstra shareholders over the past few days, people who have lost lots of money.

"They're dismayed and disappointed in the Government and Telstra's comments."

Shareholder Yolanda Mascarenhas, of Cherrybrook, said: "The fact it's dropped so drastically really affects the average mum in the street.

"The average person has been hard done-by."

Fellow shareholder Anne Ugurluyan, of Glebe, said: "Someone's to blame. I think importing a CEO from the US is a big issue because the telecom market in the US is fragmented and it's not an ideal model for Australia."

But Rebecca Piercy, who owns Telstra shares, was confident things would improve.

"The stockmarket is always going to go up and down and when you buy shares for Telstra, you should be in for the long haul," Ms Piercy said. "But now is probably a good time to buy the shares."

Prime Minister John Howard yesterday confirmed that Telstra dividends had been beefed up artificially, but rejected Labor claims that the Government had helped "hoodwink mum and dad investors into buying Telstra shares".

He said he had been prevented by law from revealing the true state of Telstra's position, which was laid out in a leaked report this week.

Treasurer Peter Costello said he had heard "scuttlebutt" about Telstra boosting its dividends from cash reserves, but did nothing about it because he was not the minister responsible.

Mr Costello's remarks appeared to confirm that the Government knew earlier than it has said that the telco was drawing on savings as well as profits to make its results look better.

In Indonesia, Mr Costello said he had dismissed rumours because they did not come into his area of responsibility.

Mr Costello said there was no obligation to make the rumour public because the Government was merely a shareholder.

The clash over dividends came as Parliament began debating legislation that would allow the Government to put the telecommunications giant on the market when it believed the share price was right.