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.

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.