Vodafone agrees to buy TelstraClear in NZ for $840M

Thursday 12th July 2012

Vodafone has agreed to acquire Telstra's New Zealand business, TelstraClear, for $840 million, giving the British company a stronger base from which to challenge Telecom.

The deal is subject to approvals from the Commerce Commission, Overseas Investment Office and Ministry of Business, Innovation and Employment, which are expected to take a number of months, Telstra said in a statement to the ASX. Its stock has been halted for the announcement.

"The deal is a natural one, bringing together TelstraClear's fixed telecommunications and data products and corporate client-base with Vodafone New Zealand's mobile offering and retail customer-base," said Telstra chief executive David Thodey.

In February, TelstraClear reported a return to profit on a pretax earnings basis, reflecting its cost-cutting programme. The Auckland-based company had earnings before interest and tax of $1 million in the six months ended Dec. 31, turning from an EBIT loss of $8 million a year earlier. The business has been a perennial under-performer for Australia's biggest phone company.

As part of the transaction, Telstra said it would return about $490 million in cash to Australia via a "pre-completion dividend" which is already consolidated in Telstra's results, it said.

Telstra said it would record an impairment of about A$130 million in 2012 and the same amount in 2013, largely due to unrealised foreign currency losses.

As part of the transaction, Telstra has entered into an agreement with Vodafone New Zealand to ensure service continuity in New Zealand for its trans-Tasman customers, Telstra said.

Telstra stock last traded at A$3.86 on the ASX and have gained 14 percent this year.

BusinessDesk.co.nz

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