Tuesday 22nd October 2013 |
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Telecom Corp has confirmed it's considering hocking off its AAPT unit in Australia as it transforms into a service-based telecommunications operator, though hasn't commented on reports it may sell its stake in mobile business Hutchison Telecommunications Australia.
The Auckland-based company is considering a possible sale of AAPT, though hasn't made any final decision, it said in a statement. The announcement comes after media reports floated the potential auction of its Australian business, managed by investment bank Goldman Sachs.
The Australian Financial Review today reported Telecom is also looking to sell its 10 percent stake in HTA, which in turn owns half of Vodafone Hutchison Australia, though Telecom's statement today didn't touch on that possibility.
At the start of the year, Telecom chief executive Simon Moutter signalled a dramatic shift in Telecom's strategy away from being an infrastructure player and targeting mobile and data applications to drive revenue growth. That includes putting greater emphasis on developing new products and grabbing market share, even at the expense of short-term earnings.
The AFR yesterday reported the sale could fetch up to A$403.5 million if it achieved a similar earnings multiple as the sale of Nextgen Networks, though it cited an unnamed source close to the deal as saying a value between A$250 million and A$300 million would be more likely.
Telecom sold its AAPT consumer division to ASX-listed iiNet for A$60 million, leaving the New Zealand company with wholesale customers for its network infrastructure. The Australian unit has been a perennial underperformer for the company since it spent A$2.3 billion to acquire AAPT at the height of the dot-com boom in 1999 and 2000.
The AAPT unit reported a 16 percent drop in earnings to $74 million in the year ended June 30 on a 22 percent slump in sales to $515 million, with the decline heightened by a stronger kiwi dollar. The unit lost customers amid market consolidation in the Australian Federal government's National Broadband Network roll-out.
Telecom's shares slipped 0.2 percent to $2.275 in trading today. The stock is rated an average 'hold' based on 10 analyst recommendations compiled by Reuters, with a median target price of $2.28.
BusinessDesk.co.nz
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