Telstra sale scoping study to get under way

The Prime Minister John Howard has admitted customers will continue to suffer problems with Telstra's phone and Internet services regardless of who owns the company.

His admission comes as the government pushes ahead with plans to sell its remaining 50 per cent share in Telstra which will go ahead once bush services are up to scratch.

Even if the government continued to part-own Telstra, Howard said there would still be problems with services.

"I don't think you will ever eliminate all problems with service delivery by Telstra whether it is owned 50 percent by the government or 100 percent-owned by the public," he told Melbourne radio 3AW.

"No company will be 100 percent perfect."

However, Howard said Telstra is in a much better state than it was when it was in full public hands.

"Was it better years ago when it was fully owned by the government? It was much worse," he said.

The government is preparing to develop a scoping study on the best way to sell its remaining shareholding in Telstra.

The study will be overseen by Communications Minister Helen Coonan and Finance Minister Nick Minchin.

Senator Coonan earlier this month indicated a decision to proceed with the study could be taken by Christmas, with results being handed to the government around April.

In the meantime, many National MPs and senators remain split over whether Telstra's services are good enough in the bush to allow the government to fully privatize the company.

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