Federal minister for finance Nick Minchin (right) with Telstra chairman Donald McGauchie in Sydney on Monday. (Reuters)

Melbourne, Oct. 9 (Reuters): The Australian government has launched the A$8 billion ($6 billion) sale of a third of its stake in top telecom company Telstra Corp Ltd, offering retail investors a small discount and free shares.

The sale is the largest public share offering in Australia since 1999, when the government raised A$16 billion from a previous sale of its Telstra stake. The government also said it was the largest global offering in a telecom firm since a France Telecom share offer in 2004.

Telstra’s shares have halved in value since the 1999 sale amid investor caution about the company, which is almost a year through a five-year programme to overhaul its business and move away from traditional fixed-line services.

Its shares fell 2.4 per cent to A$3.74 on Monday, down 5 per cent this year.

Investors will pay in two tranches, with retail investors paying A$2 per share in a first instalment, 10 cents less than institutional investors — giving them a yield of 14 per cent in the first 12 months, based on a dividend of 28 cents a share.

“It’s not a huge incentive and the risks inherent in the transformation the management are trying to put the company through remain the same,” said Scott Maddock, analyst at 2MG Asset Management.

The price of the second instalment will be determined in an institutional offer to close on November 17. The instalment will be due in May 2008. The government said retail investors would not pay more than the volume weighted average Telstra share price in the three days leading up to the offer pricing. They will also get a bonus share for every 25 instalment receipts held until the last instalment.