The future of Telecom's Australian business AAPT could soon become clear after suggestions a process to sell was close to a conclusion. While Australian media yesterday quoted sources saying Telecom had been unable to offload the underperforming unit as a package, others close to the action insisted the process was still delicately poised. "The sale process to sell the whole thing to one party is still going," said one market source. "The question of whether they get it away or not, it's a 50-50 call. The reality is this is a difficult asset to sell. "It's not a good performing asset. It's got a weak competitive position in the market. But for the right party that really wanted to focus on it, they could make it work." Telecom announced yesterday AAPT had sold its stake in Macquarie Telecom for A$9.9 million (NZ$12.2m). A spokesman said: "Telecom has previously advised that it would consider offers in relation to the AAPT business that are in the best interests of shareholders. Telecom is currently considering strategic options in respect of these assets." Also yesterday, an AAPT rival, iiNet, put its shares in trading halt pending the announcement of an acquisition. The move lent support to talk in the Australian market that Telecom couldn't find a buyer for all of AAPT and that iiNet was set to buy its consumer business. Analyst Geoff Zame of Deutsche Bank said carving off bits of AAPT was not Telecom's preferred option. But it appeared Telecom would not get the $400m-$500m it had reportedly been seeking in a straight sale, he said. "If they are serious about selling it they have to meet the market at some point ... I guess it comes down to how committed they are to exiting." In May AAPT forecast earnings before interest, tax, depreciation and amortisation of A$101.3m for the year to June. At that level its earnings were good enough for Telecom to resist a fire sale, said one source. But "in the next couple of weeks there will be a pretty clear view whether the sales process will succeed." UPDATED: Telecom requested a trading halt just after midday today, the NZX announcement reads: "Telecom Corporation of New Zealand Limited (Telecom) requests that NZX and ASX halt trading in its securities on their respective stock exchanges pending the outcome of discussions in relation to a disposal of assets.
We request that the trading halt be granted until a further announcement is made to the market. Telecom is not aware of any reason why the trading halt should not be granted."
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