-- Telstra is in talks with Vodafone New Zealand to sell
Vodafone its TelstraClear subsidiary
-- Telstra says no certainty an agreement will be reached
-- Analyst says Telstra could redeploy capital from sale
(Adds analyst's comments in 3rd and 4th paragraphs, background
from 5th paragraph.)
By Gavin Lower
MELBOURNE--Telstra Corp. (TLS.AU) said Tuesday it is in
discussions with Vodafone New Zealand about the possible sale of
its New Zealand subsidiary TelstraClear.
"Discussions are continuing and there is no certainty as to
whether an agreement will be reached," Telstra said in a statement
to the Australian Securities Exchange.
Peter Esho, chief market analyst for City Index, said the sale
makes sense for Telstra as the company focuses on its Australian
mobile and content businesses and seeks to redeploy capital to
areas generating higher returns.
"Telstra realizes it needs to do something to diversify its
earnings stream," Mr. Esho said.
In April, Telstra said it expected to generate 2 billion
Australian dollars (US$1.95 billion) to A$3 billion in excess free
cash flow over the next three years, sparking speculation about
potential acquisitions.
TelstraClear's sales revenue in the first half of fiscal 2012
fell 3.8% from a year earlier to A$255 million, according to
Telstra's earnings report for the six months to Dec. 31.
The company said at the time New Zealand's "highly competitive
market," as well as the Christchurch earthquakes and regulated
mobile price decreases contributed to the fall.
New Zealand's Commerce Commission said in its annual report in
April last year that TelstraClear had a 16% share of home internet
connections while Vodafone had 13% and Telecom Corp. of New Zealand
Ltd. (NZT) had 49%.
It said Telstra didn't have a mobile network and instead used
other companies' networks. It was the largest company retailing
cell phone coverage like this, but still had less than 1% of the
New Zealand market.
Write to Gavin Lower at gavin.lower@wsj.com