Quotes of the Day

Like many Australian mums and dads, my wife and I bought shares (O.K., installment receipts) when local telco monopoly Telstra was first offered to the public in 1997. A few years later, with our second child on board, we bought more shares when a further slab of the company was privatized in the so-called T2 offer. Australians were then still relatively new to direct share ownership, once the preserve of the wealthy. The stock market was buoyant, especially the technology and telecommunication sectors. If there was any qualm about the wider economy ("a miracle economy" after sailing through the Asian financial crisis), it was that Australia's was an "old" economy. Too reliant on commodity exports, many pundits said, Australia was being left behind as the rest of the world took advantage of the information revolution.

In the early years, the price of Telstra was caught up in the speculative mood of the time; those clever enough to have bought in on the ground floor felt particularly wise, confident of their stock-picking skills. Considering the T1 offering (priced at $3.30), the best piece of advice that came my way was from a revered political commentator. Cutting through the financial claptrap with the elegance of a boy apparatchik, he suggested that because so many voters would become Telstra owners, the stock's price would always be politically sensitive. Hence, governments would provide the dominant player with a favorable regulatory climate. Even though we lived in Sydney's suburbs, our family could now enjoy the kind of electoral pork barreling farmers and Tasmanians claimed as a birthright.

The Howard government was new to this majority owner/regulator caper. Still, there was no reason to think it would not learn to cater to its new share-owning constituency. Today, around 1 in 9 voters is a Telstra shareholder; it's a broad group, to be sure, but like a majority of asset-rich Australians, these T-people tend to vote for the John Howard–led Coalition. Just last week, a survey by Roy Morgan Research showed that the government has very strong support among its joint-venture partners in the telco: 71% of Telstra shareholders surveyed supported the Howard government's management of the economy, while only 20% opted for Labor.

But over time, the idea that the price of Telstra shares was a political albatross, or that the regulators would rig the game to the company's advantage, has been put to rest. The world has changed—for Telstra and its competitors, investors and Canberra. Voters have wised up. Australians have now lived through a decent cycle of asset-market turbulence (even though gross domestic product has been expanding for 15 years). Says one government adviser: "House prices are the key to how Australian voters feel about their wealth. Full stop." Among existing homeowners, only those who bought late in the boom in Sydney or Melbourne are unhappy, more likely with themselves than with the government—though, having campaigned to keep interest rates low, the Howard government has watched the Reserve Bank raise official interest rates three times since the October 2004 election.

A few people haven't fully absorbed that the political rules have changed on Telstra, including those hard-driving executives who run the company. Since he arrived last year, chief executive Sol Trujillo has participated in a flamboyant campaign against the regulator, the Australian Competition and Consumer Commission; senior ministers are in thrall, if that's the right word, to his charm, moxie and talent to infuriate. Trujillo, however, is doing what he was hired to do: get the best deals possible for Telstra shareholders, hurt the competition and revamp the company for growth. The market has yet to applaud his efforts.

Telstra stock was once so upwardly mobile some analysts felt it might test $10. But it has slithered down to around $3.50 these days. The company, 51.8% government-owned, has delivered steady dividends; few Australians have lost their life savings on this play, although there are stragglers who missed happy hour and paid $7.40 (in T2, touted as a "great deal" by the P.M.) to join the Telstra party. Worried that it would miss its opportunity to sell out of the telco (a long-held aim of the Conservatives), the Howard government announced on Aug. 25 that another public share offer would go ahead. T3 will sell about 21.8% of the company, worth some $8 billion; the remaining 30% will be transferred to the so-called Future Fund that underwrites the unfunded retirement-benefit liabilities of public servants.

Howard and his key ministers are not aggressively selling the latest public offer; it's a more sober T-time. The prospectus will most likely focus on the company's strong balance sheet, a plan to cut 12,000 jobs and the building of a zippy new mobile-phone network; Telstra's board has promised to pay a dividend of 28¢ a share for the year to June 2007. On the downside, Telstra resembles an antediluvian creature, raised when fixed copper lines were king and competition on lucrative products was insignificant. It's unlikely the sale managers will have trouble moving the paper to the big institutional traders and professional investors. But our family's small holdings of Telstra won't change; they'll stay out of sight for that rainy day, university fees, or retirement in 2024.

• Tom Dusevic