Telstra takes Clear

By Phil Boeyen, ShareChat Business News Editor

Thursday 15th November 2001

Telstra's (NZSE: TLS) much-rumoured purchase of Clear Communications has been confirmed.

The Australian telco has agreed to buy the New Zealand' telecommunications business from owner British Telecom for $143 million.

In addition, Telstra will refinance $270 million in loans which Clear owes BT to clear the British company's investment in the company.

"Allowing for external debt at completion this implies an enterprise value of $435 million and represents a discount of around $75 million to the company's net asset value as at March 2001," Telstra says.

Completion under the agreement is subject to obtaining NZ Commerce Commission clearance and Overseas Investment Commission approval.

Telstra International president, Dick Simpson, says Clear will be integrated with the company's Austar joint venture, TelstraSaturn, to make second largest full service carrier in New Zealand with more than 300,000 customers and 11% of the market.

He says the acquisition will be funded primarily through bank debt of up to $290 million with remaining cash requirements funded by Telstra through a mixture of equity and debt.

"TelstraSaturn's integration with Clear will bring the critical mass required for it to be a long term serious contender in this market.

"There are considerable economies of scale which have attracted us to this deal, capitalising on the relative strengths of TelstraSaturn and Clear and the ability to leverage the best practices of the joint venture shareholders."

Telstra says its MD of Telstra Wholesale, Rosemary Howard, will be in charge of the integrated business.

BT claims the decision to exit the NZ market after five years is a result of a strategy to refocus its business on key markets.

"Today's announcement follows on from the successful sale by BT earlier this year of other non-core assets around the world, and is further evidence of our determination to manage for value and reduce our debt," says BT boss Sir Peter Bonfield.

Following the integration of Clear with TelstraSaturn, Telstra will own around 62% of the JV and Austar will have 38%.

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