Telstra sell-off rings true for experts

TELSTRA'S T3 share offer opens tomorrow and, despite widespread misgivings and a listless share price, analysts say it's worth getting on board.

Investors have until November 9 to buy into the Federal Government's $8 billion sell-off of its last third of the telco.

Telstra's share price struggled at $3.63 by Friday's close of trading, and investment analysts were generally lukewarm about the offer. Most said there were better opportunities elsewhere - with the media market in hyperdrive.

However, experts said investors could do well out of T3 over the next few years.

"I invest for my mother-in-law and I am putting her money into T3," said Clime Asset Management chairman Roger Montgomery.

Mr Clime values Telstra at $2.80 to $3 a share based on how the business now stands.

Mr Montgomery said Telstra would be good to own and would do well as media barons battle under the new media ownership laws.

"The Government was never able to put content into Telstra but a media owner could. Telstra has the distribution and will be a great media force in the country in the hands of a media titan," he said.

Mr Montgomery said T3 was a far more attractive buy than the previous share tranche, T2, as there was a 13-month window whereby anybody buying T3 shares at $2 had a gross yield of 27 per cent.

"You would have to be pessimistic to think they won't be above $2 in March 2008 when the final payment is due," Mr Montgomery said.

Greg Canavan, a senior equity analyst at Fat Prophets, said people should do well out of T3 in the short and long term.

"We think Telstra management is doing a pretty good job at the moment, despite all the negative criticism," he said.

"Everyone is rubbishing Telstra so we think there is an opportunity there. The actual business is generating cash and doing well, so it is good for long-term investment."

Mr Canavan said many investors were still smarting after being burnt in 1999 when they bought T2 at $7.40 a share only to lose 50 per cent of its value.

"A lot of people are reacting emotionally after they lost from T2," he said. "But this is a different offer and the share price is half that of T2. I would say T3 is the best of all of the Telstra offers so far."