The sharp fall in Telstra’s share price sparked by this week’s strategic review will not affect the timetable for the company’s full privatisation, the government minister in charge of the sale said on Wednesday.

Canberra plans to sell its remaining 51.8 per cent stake late next year and has targeted a sale price of A$5.25 a share to generate revenues of A$34bn (US$25bn).

However, shares in Telstra fell 7 per cent on Tuesday the biggest fall since 2001 to $4.02 after the company cut its earnings forecast by up to 30 per cent and scrapped a A$1.5bn special dividend. The shares were unchanged on Wednesday.

Analysts now increasingly believe the government might have to delay the sale to stand any chance of meeting its desired revenue target.

However, in an interview with the Financial Times, Nick Minchin, finance minister, said Canberra remained committed to its sale timetable and would not be deflected by “short-term” events.

“The government will decide in February or March whether to proceed with the full privatisation of Telstra. Nothing has changed.”

The government is next week expected to name the investment banks charged with co-ordinating what would be the world’s largest equity offering.

Telstra’s new five-year strategy involves cutting 12,000 jobs and spending A$10bn to upgrade its networks to provide wireless and broadband services that would generate new revenue streams to counter falling sales from traditional fixed-line services. Telstra has 60 per cent of Australia’s A$35bn a year telecoms market.

The company’s announcement prompted a raft of share price downgrades yesterday as analysts digested the strategic U-turn. Citigroup lowered its target price by 14 per cent to A$3.75 with similar sentiment at Goldman Sachs JB Were, Merrill Lynch and Macquarie Bank.

Morgan Stanley called the new strategy “a bold leap into the unknown”, warning: “The company is taking on significant execution risk and we are sceptical the long-term financial targets can be met.” Greg Winn, Telstra’s chief operating officer, said: told analysts yesterday: “We are taking a beating over what we’re doing, but this will be a much stronger company going forward.” The share price fall will add to pressures building on Sol Trujillo, Telstra’s recently appointed Telstra chief executive, who is embroiled in a public war of words with the government over what regulations the company should face after it is privatised. However, Mr Minchin said: “I think he remains the right man for the job of giving this company a strong future and a strong strategic direction.”

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