Vodafone keen to buy Telstra NZ subsidiary by: Mitchell Bingemann From: The Australian June 06, 2012 12:00AM Increase Text Size Decrease Text Size Print Email Share Add to Digg Add to del.icio.us Add to Facebook Add to Kwoff Add to Myspace Add to Newsvine What are these? TELSTRA could pocket as much as $400 million from the sale of its trans-Tasman subsidiary TelstraClear after announcing it was in discussions with Vodafone New Zealand.
Yesterday, the telco confirmed in a statement to the Australian Securities Exchange that the New Zealand unit was the subject of sale talks initiated by Vodafone New Zealand but added there were no guarantees those talks would result in a transaction.
"Discussions are continuing and there is no certainty as to whether an agreement will be reached," Telstra said.
While it's understood the talks are in the early stages, analysts estimate the TelstraClear asset could be worth between $300m and $400m based on an earnings before interest, taxes, depreciation and amortisation multiple of four times.
TelstraClear was created in 2001 when Telstra merged its New Zealand arm, TelstraSaturn, with Clear Communications, which it bought from British Telecom for about $180m.
Since then, Telstra has invested heavily in TelstraClear's fixed-line network to establish it as a third force in the New Zealand market with Telecom NZ and Vodafone.
TelstraClear, which is now New Zealand's second largest full-service telecommunications company, operates a small cable and copper fixed-line network with about 270,000 customers as well as mobile service -- wholesaled from Vodafone -- with about 50,000 customers.
However, the small revenue contribution of the unit means the New Zealand arm has never featured highly in Telstra's overall strategy.
Last year, TelstraClear generated $84m in EBITDA, on revenues of $516m, or about 2 per cent of the $25 billion Telstra reaps each year in total revenue.
Analysts yesterday said the sale of its New Zealand unit makes sense for Telstra, which is shifting its focus to mobile and content businesses, and that the willingness of the telco giant to sell underperforming assets points to a more active approach from new chief financial officer Andy Penn.
"After years of wanting to hang on to all of it assets, Telstra is finally taking a more active approach to its portfolio management. It's good to see the new CFO move around some of its underperforming assets," one analyst said.
The TelstraClear business could be a good fit for Vodafone New Zealand, which is keen to enter the fixed-line communications arena. The acquisition would also help Vodafone NZ in its battle against the nation's incumbent operator, Telecom NZ, to be the number one telecommunications
HTA Price at posting:
3.6¢ Sentiment: Buy Disclosure: Held
