Telecom's sale of its Australian business unit AAPT for $494
million is a good price and positive move for the company as
it looks to focus more on New Zealand, say analysts.
The NZX-listed telco this morning announced the sale of AAPT
for A$450 million to Aussie telco TPG. This follows Telecom
selling AAPT's consumer division to iiNet for A$60 million
The remaining chunk of the business being sold to TPG
provides data, cloud, voice, internet and mobile services to
business, government and wholesale clients.
In the Telecom's latest financial results for the 12 months
to June 30, AAPT recorded earnings before interest, tax,
depreciation and amortisation of $74 million, down from $88
million the year before. As at June this year AAPT employed
720 full-time employees, out of a total of 6622 at Telecom.
Telecom spent A$2.2 billion buying AAPT at the height of the
dot.com boom in 1999 and 2000 but it has been seen as a poor
performer for the company.
Forsyth Barr senior equity analyst Blair Galpin said Telecom
had been trying to sell AAPT for about four or five years and
that he believed today's deal was a good one.
"There was talk probably about five or six weeks ago of a
price around A$400 million. At that point we thought [that]
was a good price so A$450 million is even better. AAPT, even
though it's sort of turned around a bit in the last year or
so, has been a bit of a drag on Telecom long term ... it
allows the company to really focus on New Zealand and get New
Zealand in shape," Galpin said.
Telecom chief executive Simon Moutter said today the sale was
consistent with the company's strategy and its desire to
focus on New Zealand and the needs of local customers.
Craigs Investment Partners research analyst Arie Dekker said
the sale was "a very good result".
"[The sale price] also likely reflects the fact they've been
able to secure a purchaser who sees synergies for the
business, bringing that business together with their own"he
With the exception of its half-share of the Southern Cross
cable, AAPT was the last big overseas assets owned by the
Telecom says money from the AAPT sale will, first and
foremost, go to repaying debt. Telecom said it will provide
further detail on how the sale proceeds will be used at its
half year result next February.
The sale with go through on February 28.
In late morning trading Telecom shares were at $2.33, up 1.97
- Hamish Fletcher of the New Zealand Herald