Telstra, Deal Is Option
CEO Says No Suitors Have Come Forward; 'Not on Our Agenda'
By Susan Murdoch
The Wall Street Journal
Tuesday, May 15, 2007
MELBOURNE, Australia -- Sol Trujillo, chief executive of Telstra
Corp., said the telecommunications company would consider any
takeover options, but it hasn't been approached by another
There has been speculation among analysts in recent weeks that
Telstra would make a logical private-equity target, mainly
because of its strong cash flows and low gearing.
Speaking to reporters yesterday at the Future Summit 2007
conference in Melbourne, Mr. Trujillo was asked whether the
company had been approached. "The answer to that is simply no,"
Mr. Trujillo said the board would always consider what is in the
best interests of shareholders and would look at "all options."
"In terms of a takeover, that's not on our agenda. It's not
something we think about," he said. "There's a lot of media
speculation, but that's what I would call it -- it's all
Fueling the market talk is the forthcoming sale of the
Australian government's 17% stake in the telecommunications
Canberra transferred its remaining holding in Telstra to its
Future Fund, an investment vehicle set up to meet future
public-service pension liabilities, as part of its final stake
sale last year. The fund will be able to sell down that stake
later this month.
Asked whether the May 20 sell-down date could be a catalyst for
a possible buyout, Mr. Trujillo said: "I don't look at things
like that as the driver of our business. What is going to drive
value creation for our shareholders is performance," Mr.
Trujillo told CNBC Asia's Squawk Australia program.
Mr. Trujillo said he thinks shareholders are happy with the
performance of the stock price since the company launched its
new business strategy.
Credit Suisse analyst Justin Cameron said in a note to clients
this month that a private-equity group could pay up to 6.50
Australian dollars (US$5.41) a share for Telstra and still
generate an internal rate of return of 20% on a conventional
Telstra shares rose four cents, or 0.8%, to A$4.90 on the
Australia Stock Exchange, giving the company a market
capitalization of A$50.1 billion (US$41.7 billion). Telstra's
shares have rallied since the government sold its stake in
December amid increased investor confidence in the industry
Write to Susan Murdoch at