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TELSTRA SAYS IN NEGOTIATIONS ON VENTURE WITH SHANGHAI
GENERAL
By Alan Wood
SYDNEY, July 2 AAP - Telstra's push into Asia has
gathered pace with a new joint venture project with
China's Shanghai General Electronics (Group) Co likely
to involve the Australian telco providing services to
the lucrative Shanghai market.
This follows Telstra's announcement yesterday that it
has taken 100 per cent of CSL, a Hong Kong mobile
telephone operator, and is part of its plans to source
more revenues from offshore.
Telstra International spokesman Graeme Salt said today
the joint venture discussions had formally started
yesterday, but a structure still had to be negotiated.
Analysts said the further push into China was sensible
given Telstra's strong balance sheet giving it the
ability to pickup assets relatively cheaply in a time
of telco sector downturn.
One analyst said Telstra had signalled its capital
expenditure would remain constrained in the Asian
region and it would look to extract value from the
region via such partnerships.
Shanghai General Electronics Group is the manufacturer
of various electronics components and supplies
international companies such as Motorola Inc.
Mr Salt said he could not comment on how much Telstra
would likely put into the Shanghai venture but noted
Telstra was "an active investor and major participant"
in such projects.
He said any agreed joint venture would look to provide
telco services in the Shanghai region, particularly to
businesses in the area of broadband - the transmission
of a large amount of electronic information including
telephone calls, television and the internet.
"Shanghai municipality alone has got a population of
13 million, and the surrounding area has got a
population of nine million so it's larger than
Australia in itself," he said.
Mr Salt said it was possible that Telstra's initial
stake in the venture could be around 30 per cent - but
then work up towards 50 per cent, he added.
That would relate to China bringing down foreign
investment barriers post the country's accession to
the World Trade Organisation.
Telstra yesterday announced it was taking full control
of Hong Kong mobile phone operator CSL, as a platform
for other possible acquisitions in SouthEast Asia and
particularly China.
To take 100 per cent of CSL, Telstra agreed to buy the
remaining 40 per cent stake in holding company
Regional Wireless Co (RWC) from Pacific Century
Cyberworks Ltd (PCCW) for an effective price of $US475
million.
Telstra also has a 50:50 internet infrastructure joint
venture with PCCW known as Reach Ltd based in Asia.
Last year Telstra chief executive Ziggy Switkowski
said the telco wanted about 20-25 per cent of its
value to be in Asian-based business within five years,
and would look to play a part in Beijing's 2008
Olympic Games.
In China, Telstra has a partnership with leading
Chinese mobile provider China Unicom, under which it
is exploring business opportunities.
Yesterday Dr Switkowski said Telstra's offshore
businesses currently contributed about seven per cent
of Telstra's earnings before interest, tax,
depreciation and amortisation (EBITDA), and the
further CSL stake would take this figure to about 8.5
per cent.
AAP arw/sh