Telstra announces AUD 273 million Ooyala impairment

Friday 2 February 2018 | 07:44 CET | News
Australian operator Telstra expects to make a non-cash impairment and write down the carrying value of Ooyala, its US-based intelligent video business, to zero. Following completion of its impairment testing process for the half year ended 31 December 2017, Telstra expects to recognise an impairment charge of AUD 273 million against goodwill and other non-current assets in its results for that period to write the company value down to zero. This is subject to Audit and Risk Committee and board review and approval.

Telstra acquired 9 percent of Ooyala in 2012 increasing its holding to 98 percent in 2014 as part of a broader strategy to provide services for broadcasters and OTT companies. Telstra identified challenges in the business and changing market dynamics 18 months ago and impaired the business at the time of its 2016 results.

Telstra also reports that there are three key parts of the Ooyala business – ad tech, OVP (video player) and a workflow management system (Flex media logistics). "Ad tech, has not performed well and we will therefore seek ways to exit that part of the business. Importantly, we do see a future in the other core parts of the Ooyala business – video player and the workflow management system. The new Ooyala management team is making positive progress through improved booking trends, product quality and reduced customer churn. However the business has yet to achieve sufficient scale", Telstra added.

Telstra nevertheless believes it is appropriate to impair all of the goodwill associated with the business. From here it plans to sharpen Ooyala’s focus by exiting ad tech and focusing on the underlying video platform and continuing to serve its customers. The company plans to increase emphasis on its differentiated Flex media logistics product and drive operational efficiencies and leverage its go to market partnerships with companies such as Microsoft.

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