Telstra will sell TelstraClear, its wholly owned New Zealand subsidiary, to Vodafone New Zealand for NZ$840 million (A$660 million). Telstra will also return approximately NZ$490 million (A$380 million) in cash to Australia via a pre-completion dividend, which is already consolidated in Telstra’s Group results.
Vodafone New Zealand will acquire TelstraClear’s voice and data based services, network infrastructure and New Zealand customer-base.
Telstra’s Chief Executive Officer, David Thodey, said the transaction has a strong strategic rationale and is good for Telstra’s shareholders.
“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,” Mr Thodey said.
“The transaction is consistent with Telstra’s overall strategy and capital management framework that we outlined in April,” he said.
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.
TelstraClear CEO, Dr Allan Freeth, says the deal represents another period of TelstraClear’s history, growing from a local telco on the Kapiti coast into one that now enjoys an international reputation.
“Our hard working staff should feel extremely proud of what they have achieved.”
The announcement, he says, will not change the quality products and services TelstraClear provides to its customers. “It will be business as usual for all of our customers.”
“The acquisition, if approved, will create a new force in the New Zealand market in readiness for the ultra-fast broadband roll out and will provide customers with a full suite of fixed and wireless telecommunications and data products,” he says.
“We look forward to working with Vodafone New Zealand to continue to provide outstanding service and products to our customers all around New Zealand.”
Dr Freeth says the sale is contingent on the approval of the New Zealand Commerce Commission, the Ministry of Economic Development, and the Overseas Investment Office. This is expected to take some months.
The sale is contingent on New Zealand regulatory approval, including the New Zealand Commerce Commission, Overseas Investment Office and Ministry of Business, Innovation and Employment, which is expected to take a number of months.
The sale proceeds, when received, will be incremental to Telstra’s previously stated expected three-year excess free cashflow of $2-3 billion (subject to the NBN roll out schedule and market conditions).
Subject to completion adjustments, Telstra will also record an accounting impairment of approximately A$130 million in FY2012, and an additional impairment of approximately A$130 million in FY2013 which is largely due to unrealised foreign currency losses.
Note: Figures are based on an A$ NZ$ conversion of $1.28.