Australian telecommunications carrier Telstra will sell TelstraClear, its wholly owned New Zealand subsidiary, to Vodafone New Zealand for NZD 840 million. Vodafone New Zealand will acquire TelstraClear's voice and data-based services, network infrastructure, and New Zealand customer base.
TelstraClear is New Zealand’s second-largest fixed operator and owns a 6,600km fibre backbone connecting 19 of the country’s largest cities. It also has an extensive local access network with 2,000km of fibre and 4,500km of copper as well as a cable TV and broadband access network passing 150,000 homes in Wellington and Christchurch. The sale requires New Zealand regulatory approval, which is expected to take a number of months, and is expected to close in Q4.
The deal forms part of Vodafone's 'total communications' strategy to add fixed-line services to its mobile operations. It also gives Vodafone access to the planned wholesale fibre access network rolling out to 75 percent of New Zealanders, which will allow Vodafone New Zealand to purchase last mile wholesale access outside of TelstraClear’s existing footprint on equal terms with Telecom New Zealand. In response to the announcement, Telecom New Zealand said it is "well positioned to thrive if consolidation occurs in the telecommunications industry."
Vodafone said it expects "significant" cost and capex savings from combining its network with TelstraClear, as well as merging commercial and administrative functions. The takeover is expected to add to EPS from the second year after completion and to free cash flow from the first year.
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. Telstra said it will also return approximately NZD 490 million in cash to Australia via a pre-completion dividend, which is already consolidated in Telstra's Group results. Furthermore, subject to completion adjustments, Telstra will also record an accounting impairment of approximately AUD 130 million in FY 2012, and an additional impairment of approximately AUD 130 million in FY 2013 which is largely due to unrealised foreign currency losses.
