SYDNEY (Reuters) - The Australian government has sold A$4 billion ($3 billion) of shares in Telstra (TLS.AX) to brokers and financial planners in the first stage of its plan to sell a third of its stake in the country's biggest phone company.

The prospectus was released two weeks ago and the government allocated 1.1 billion of shares for the broker and planning community, half of the total A$8 billion of shares on offer.

Finance Minister Nick Minchin said in a statement on Sunday 1.1 billion shares were sold to brokers and financial planners who had applied for the allocation on behalf of their clients.

He said the government was pleased by the level of support.

The other A$4 billion in stock will be sold to retail and institutional investors, with the shares scheduled to make their debut on the Australian Stock Exchange on November 20. The offer to retail investors opens on Monday and closes on November 9.

Investors will pay in two tranches, with retail investors paying A$2 per share in a first installment, 10 cents less than institutional investors -- giving them a yield of 14 percent in the first 12 months, based on a dividend of 28 cents a share.

The price of the second installment will be determined in an institutional offer to close on November 17. The government is offering 2.15 billion shares, plus an over-allocation option.

The government announced in August it would sell about A$8 billion of its remaining 51.8 percent stake in Telstra. The rest of the stake will go into a separate investment fund set up to cover public service pension payments. The shares will remain in the fund for two years, after which it is free to sell them.

The government raised A$16 billion from a previous sale of a Telstra stake in 1999. Telstra's shares have halved in value since the 1999 sale.

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