The T3 sale was always going to be a delicate balancing act – sell it too expensively and the investors would turn on the government for doing another T2; sell it too cheaply and the non-investors could criticise the government for giving away their asset too cheaply.

Three weeks down the track, it’s starting to look a little embarrassing on the upside. A five or 10% profit on listing is one thing, but the T3 instalment credits at $2.52 this morning are already showing a 26% profit for retail investors and never mind the fat dividend. That’s looking like the government and its advisers being too generous to investors at the expense of taxpayers.

Of course T2 shares rose for a while too and it remains premature to say whether Team Trujillo will deliver. There’s even a warning that all is not entirely well with a report that Telstra’s top mobile phone sellers have missed their targets.

But it seems the market doesn’t want to know about that just now with all the telcos enjoying a rally. Optus owner Singtel is having a run – up another couple of cents this morning to $2.53 after struggling to hold $2 in late September — and even troubled Telecom NZ has bounced by a similar proportion.

There’s an inherent contradiction in this telco bubblette – continuing erosion of fixed line and mobile margins means not all the players can be winners. Either they all lose a bit or one breaks through at the expense of the others. But don’t try to tell the stock market that just now – the punters and brokers are having far too nice a party.

Peter Fray

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