Australian Prime Minister John Howard was forced to abandon his goal of fully privatising telecoms giant Telstra because of a slump in the company's share price and a looming election next year, analysts said.
Howard said Friday that his government would sell eight billion dollars (six billion US) of Telstra shares in October and November, about a third of its remaining 51.8 percent stake in the company.
But the plan fell short of Howard's long-held ambition of fully privatising Australia's largest telecoms company, after two previous partial floats in 1997 and 1999, known as T1 and T2.
After the upcoming eight billion dollar T3 float, Canberra's remaining Telstra stake of 14-15 billion dollars, will move to a quasi-government holding structure called the Future Fund, for sale when the share price improves.
With Telstra shares near all-time lows, Finance Minister Nick Minchin admitted Saturday that the stake was likely to remain parked in the Future Fund "for quite some time".
Austock senior broker Michael Heffernan said the partial sell off was a solution that satisfied neither the Howard government nor markets eager for full privatisation.
"It's moving from being half pregnant to being three quarters pregnant and that's doesn't help the mother or the baby telco," he told Sky News.
"It would have been better to sell the whole lot."
Howard has pushed for the full privatisation of Telstra since winning office in 1996 but was repeatedly rebuffed when the opposition Labour Party blocked the sale in the Senate.
And since winning control of that chamber in a 2004 poll he has been frustrated as a share price slide undermined the case for a full sale - the result of poor earnings and a row with senior Telstra management over regulation.
The prime minister described the T3 sale as honouring a long-term promise to the Australian electorate to end the "absurd conflict" of the government being both chief regulator and major shareholder of Telstra.
"Nobody can say that I didn't promise to do it," he said.
"Nobody can say that the government misled the Australian people, nobody can say that the government didn't campaign to end the absurd conflict of interest." In contrast to a triumphal press conference after passing the Telstra sale bill through the Senate last year, Howard announced the T3 sale late Friday, a time traditionally used by the government for unpopular announcements.
In a hastily-called press conference in the island state of Tasmania that Deputy Prime Minister Mark Vaile admitted he was unaware of, Howard acknowledged a problem with Telstra's share price, which hit a low of 3.45 this week.
"We would have sold the remaining shares in Telstra a lot earlier at a higher price had it not been for the legislation being blocked in the Senate by the Labour Party and by others," Howard said. Finance Minister Nick Minchin said a general election due late next year had influenced the government's thinking.
"We don't want to be selling shares in an election year next year," he said.
"So this is the best time for the Government to offer at least part of its shareholding to the public."
Telstra shares have plunged more than 30 percent over the past year, hitting a nine-year low of 3.45 earlier this week.
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