THE DISTILLERY: Telstra's dough

Telstra shareholders must be among the biggest fans of the national broadband network, largely because there's $11 billion in it for them. While we still await the outcome of the competition watchdog's assessment of Telstra's structural separation, the next question is what Telstra will do with all that cash. The Australian Financial Review's Tony Boyd finds Telstra boss David Thodey talking seriously about capital management and special dividends, setting hearts aflutter on the Telstra register. Elsewhere, another business commentator says minority Leighton Holdings shareholders were comfortable with majority ownership because Wal King could find a balance between the two – so what about Hamish Trywhitt?

The Australian Financial Review's Chanticleer columnist, Tony Boyd, says interest could well return to Telstra shares this year, even after its stellar performance in 2011, because chief executive David Thodey is talking about "dividend opportunity” with the $11 billion NBN deal fast approaching.

"In anticipation of that deal, the market has been speculating that the company will return between $500 million and $1.5 billion to shareholders. Most analysts have opted for the mid-point of those two figures and assumed that this would take the form of a buyback despite concerns about the equity involved in this form of capital management. Many institutional investors like and demand off-market buybacks, which involve a component of capital return carrying a big fully franked payment. This has involved big hits to tax revenue of the federal government, especially when it has involved large companies such as BHP Billiton, which had a buyback totalling $6 billion in 2011.”

The Australian's John Durie explains how Leighton Holdings shareholders had become accustomed to being in the minority to Hochtief – and now ACS – because legendary chief executive Wal King was looking out for them.

"As so often happens when one regime is in power for too long, those benefits appeared to diminish as his 24 years in the saddle rolled on. That means the Leighton minorities' list of uncertainties include if and how ACS will run the company, how it will recover from the results of the evident excesses of the previous regime and how it will do all this in an uncertain global economic environment. Suffice to say, Tyrwhitt was correct to say in a report yesterday that the company had to be smarter about how it operated.”

The Sydney Morning Herald's Michael Pascoe urges readers to remember that critics attacking the budgets of France and the US who then draw a line to say the welfare state and the military-industrial complex are nation killers take a step too far.

"There is nothing wrong with having a welfare state (check Scandinavia) as long as you're prepared to pay for it, just as there's nothing wrong with having a military establishment that's a multiple of anyone else's, on the same basis. Stating the obvious, generous welfare schemes and aircraft carriers can't be paid for indefinitely with debt. That's what Standard & Poor's has just stated. The European argy-bargy over greater fiscal union and discipline is only the starting point of dealing with that reality. Political paralysis is preventing the US doing more than acknowledging that Washington has a problem and Japan doesn't seem to have even got that far yet. What's awaiting them all is a hyper-competitive world where no country is simply entitled to be rich.”

Staying with international affairs to round out this morning's business commentaries, The Australian's Jennifer Hewett expects there'll be more bad news out of Europe following France's departure from the AAA club, while the Herald Sun's Terry McCrann says Australians should keep their eye on China this year.

In resources, The Age's Garimpeiro columnist, Barry Fitzgerald, finds ASX-listed Argonaut Resources claiming that traditional land holders effectively have a right to veto exploration and mining, while The Australian's Robin Bromby touches base with the NSW town of Cobar, known for its long-life mines.

And finally, with Bernard Tomic's coming-of-age victory in the first round of the Australian Open getting the year's opening grand slam off to a terrific start, Fairfax's Ian McIlwraith takes a look at lead Open sponsor Kia Motors.