If Helen Coonan
ever wanted a lesson in efficient capital markets, she need only look
at the impact that she has had on the Telstra share price today. Her
appearance on Meet The Press and subsequent laying down of the gauntlet to the Telstra board to put up or shut up has backfired with grave consequences.

On
the program she used the “not so veiled” threat that the board of
Telstra should be careful of what they allowed their executives to say,
given the continuous disclosure requirements of the Corporations Act
and the ASX. I bet she didn’t expect such a swift response.

This
morning’s warning to shareholders that 2006 profits will be down by
between 7% and 10% and that the cost of government imposed relations
could be as high as $850m has sent the share price down some 4% to
$4.36. At this level maybe Phil Burgess may get his mother to buy a few
shares, or perhaps he will wait until the stock trades ex dividend of
20 cents later this month at which stage the stock could be trading
below $4.18.

I am sure that John Howard and a pile of investment
bankers around Australia are wondering why Coonan wanted to stir the
pot and inflame an already volatile environment between the Telstra
management and the Government, particularly at such a critical time in
the legislative process surrounding the sale of Telstra.

The
events of today have been an expensive lesson for Coonan. Not only has
she helped to drive down the price of Telstra shares, she has
destabilised the privatisation process. As an experienced politician
she should have known that when you back someone into a corner they
will respond as did the Board of Telstra today.

Well done Helen.