Australia fund sells part of Telstra stake-paper

SYDNEY Aug 21 (Reuters) - Australia's $44 billion sovereign wealth fund has sold about a quarter of its stake in telecommunications company Telstra Ltd (TLS.AX), the Australian Financial Review reported on Friday.

The Future Fund, Australia's largest single investment fund which was set up in 2006 to cover future public service pension liabilities, sold 683.7 million shares in Telstra for A$2.4 billion ($2 billion), the business daily said.

The sale, through a bookbuild by UBS, was at A$3.47 a share, a 5 percent discount to Thursday's close of A$3.65.

The paper said the sale came after a weak performance by Telstra's shares and irritation on the part of the fund over Telstra's poor relations with the Australian government.

However it also cited unidentified investors as saying that the sale was in line with the fund's stated intention to reduce its holding and was not a reflection on the company's outlook.

The Future Fund held 16 percent of Telstra after the government gave it the shares when it sold its holding in the former state monopoly. The fund will now hold 12 percent and remains Telstra's largest shareholder. ($1=1.203 Australian Dollar) (Reporting by Jonathan Standing)