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Last Updated: Sunday, 12 November 2006, 11:53 GMT
Australia to expand Telstra offer
Telstra customer
The sell-off has prompted controversy in Australia
A late rush of demand for shares in Australian telecom giant Telstra has prompted the government to increase the size of its share offer in the company.

The government had planned to sell an 8bn Australian dollars ($6.1bn; 3.2bn) chunk of its 51.8% holding in the firm.

But after a late surge in demand from retail investors, total demand for shares was now worth A$9.2bn, it said.

The sale - dubbed T3 - will be the biggest public share offering in Australia since 1999.

The government raised A$16bn in that year from a previous Telstra sale.

The float is known as T3 because it is the third tranche of Telstra shares offered by the government, after T1 in 1997, and T2 in 1999.

Strong demand

On Sunday, the government announced it would be expanding the sale as demand had been well above the planned 2.15 billion share offer.

Finance Minister Nick Minchin added that interest in T3 from individual applications, brokers, and a Japanese retail offer, meant retail demand was now around 2.5 billion shares. The retail sale closed on Friday. A further institutional offer opens on 15 November.

Mr Minchin said the prospectus for the share sale did allow the government to expand the number of shares on offer under a 15% over-allocation option.

"While we will not know the take-up by institutional shareholders until the close of the offer at the end of this week, the results of the retail offer to date means an increase will occur," he said in a statement.

Controversial plan

Following the sell-off the government plans to put the remainder of its Telstra shares in an investment fund which has been set up to cover public service pension payments.

Plans to privatise the telecom firm have been dogged by controversy. Opponents say it could result in reduced rural services.

Supporters of privatisation think it will make the company more competitive.

The T3 shares will begin trading on the Australian stock market on 20 November.

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