SYDNEY (Reuters) - Shares of Australia's biggest telecommunications company Telstra Corp Ltd (AX:TLS) fell 8 percent on Wednesday after it dropped a plan to raise A$5.5 billion ($4.4 billion) by selling income it receives from a government-owned broadband network.
The National Broadband Network pays Telstra about A$1 billion per year to rent ducts and other infrastructure and the telco said two weeks ago it was considering on-selling about 40 percent of that income to investors.
It will continue to receive that income but dropped the plan to on-sell it when the government company running the network, nbnco, refused to consent to the idea because it was concerned it may be disadvantaged financially.
Telstra shares fell as much as 8 percent and recovered slightly to be down 6 percent at A$3.58, their lowest intraday level since 2012, by late morning. The broader market was flat.
The shares also traded ex-dividend on Tuesday, adding to the downward pressure. The 23-cent stock price decline compared with the company's latest dividend of 16 cents per share.
The National Broadband Network will replace Telstra's copper lines by about 2020.
"The proposed transaction highlighted the significant value in Telstra's core underlying telecommunications infrastructure as represented by the potential ... monetization opportunity," Telstra said in the statement.
Earlier this month, Telstra said it would cut its dividend by 30 percent in fiscal 2018, partly because of the negative impact of the National Broadband Network.