-- Telstra to sell NZ subsidiary TelstraClear to Vodafone NZ
-- Vodafone NZ to buy TelstraClear for NZ$840 million
-- Telstra to book A$260 million of impairments in FY12 and
FY13
(Adds investor comments in 7th-9th paragraphs and 11th
paragraph)
By Gavin Lower
MELBOURNE--Australia's largest telco Telstra Corp. (TLS.AU) said
Thursday it plans exit New Zealand by selling its subsidiary
TelstraClear to Vodafone for 840 million New Zealand dollars
(US$669.2 million), as it repositions to the high-speed internet
world.
Australian government-owned NBN Co. is rolling out a national
A$36 billion high speed internet network which will see Telstra
paid A$11 billion over 30 years to lease infrastructure,
progressively shut down its copper line network and transfer its
customers to NBN Co. The deal is critical to the future of Telstra,
which has a market capitalization of A$48 billion.
Under the proposed sale of TelstraClear, Vodafone would acquire
its voice and data based services, network infrastructure and
customer base making it the second largest telco in New Zealand,
behind Telecom Corp. of New Zealand Ltd. (NZT). It is subject to
New Zealand regulatory approval which is likely to take several
months.
"The transaction is consistent with Telstra's overall strategy
and capital management framework," Telstra Chief Executive David
Thodey said in a statement.
The deal was expected after Telstra revealed last month it was
in discussions with Vodafone New Zealand about a possible sale.
Justin Braitling, a portfolio manager at Watermark Funds
Management, which holds Telstra shares, said the price for
TelstraClear was above expectations.
"It demonstrates they are focused on capital management, that's
a positive," he said, adding that New Zealand was "not a great
market" for mobile phone growth where smart phone penetration is
low.
"It's been a difficult market, so exiting that market is a good
sign," he said.
Telstra plans to return about NZ$490 million to Australia from
the sale, which would be incremental to A$2 billion-A$3 billion in
free cash flow it expects over the next three years from its deal
with NBN Co.
Mr. Braitling said he hopes Telstra would consider returning
more funds to shareholders - either through dividends, special
dividends or buybacks - as the need to invest in networks decreases
in the NBN world.
Telstra expects to book impairments of around A$130 million in
fiscal 2012 and about the same in fiscal 2013 largely because of
unrealized foreign currency losses.
Write to Gavin Lower at gavin.lower@wsj.com