ASIC to probe suspicious trade in Telstra shares

Sunday’s announcement that Telstra reached an agreement with the Government over the construction of the NBN has been a talking point for investors all week, but suspicious trade in Telstra shares last Friday has led Shadow Treasurer Joe Hockey to question whether some investors might have had the inside word ahead of the official announcement.

Telstra shares rose 6c or 2.2% on Friday, rising from $3.17 to $3.23. Trading volumes on the day were the highest in three weeks, and it was the biggest share price rise in eight trading days.

Following the announcement of Telstra’s deal with the Government, Telstra shares jumped 6% in early trade before finishing the day at $3.34, a rise of 3.4% on the day.

But it is the trade on Friday – two days before Telstra’s announcement was made public to the market – that let Hockey to call on the Australian Securities and Investments Commission to investigate ”whether the movement in the share price of Telstra has been appropriate”.

Corporate Law Minister Chris Bowen has agreed to the request, saying that while he has not followed the movement in Telstra’s share price, the government “takes these matters very seriously”.

Telstra has said it will co-operate with any investigation.

Investors have been waiting impatiently for the uncertainty around Telstra’s deal with the Government to me resolved and the announcement of the deal was always likely to send the stock climbing sharply.

Indeed, rumours that a deal had been struck back in April sent Telstra shares sharply higher until the telco was forced to deny a deal had been struck.

The deal will see the Government pay about $9 billion to rent Telstra’s infrastructure, while Telstra has agreed to shut its copper network and migrate customers to the NBN.

It has been welcomed by most sections of the telecommunications sector, although the Opposition, which remains opposed to the entire NBN plan, remains unimpressed.