AAPT board could meet today to weigh Telecom NZ offer

The board of Australian carrier AAPT may meet as early as today to consider a $A1.5 billion takeover bid from Telecom New Zealand. Telecom made the $5.10 pre share offer yesterday, ending speculation over its intentions which began in May.

The board of Australian carrier AAPT may meet as early as today to consider a $A1.5 billion takeover bid from Telecom New Zealand.

Telecom made the $5.10 pre share offer yesterday, ending speculation over its intentions towards AAPT which began in May, when it started acquiring AAPT shares, - helping drive off a hostile bid for AAPT by Cable & Wireless Optus, Australia's second-biggest carrier.

Since then the two companies have had numerous discussions which sought to reach a basis for Telecom to increase its shareholding percentage, Telecom CEO Dr Roderick Deane said in a statement. Telecom NZ Australia currently owns 19.8% of AAPT shares.

Last month, AAPT reported revenues up 50% over its previous fiscal year, to $750.8 million for its year ended August 30, despite difficulties it said were caused by the hostile Optus bid.

Deane said Telecom's international strategies included expanding its trans-Tasman business, which has languished somewhat since the failuire of its first Australian venture, Pacific Star.

" AAPT provides Telecom with facilities-based participation in the fast-growing Australian market," Deane said. "Increasing our shareholding should enable both Telecom and AAPT to achieve key strategic goals sooner than if they were to proceed independently."

All AAPT shareholders will have the opportunity to sell some or all of their shares under the offer. But Deane said that Telecom would prefer that AAPT remained listed on the Australian Stock Exchange.

"We would like to maintain a widely held register with institutional and smaller investors accounting for a substantial proportion of the shares on issue," he said.

"We fully expect that many shareholders will continue to hold their AAPT shares and benefit from the potentially significant synergies that are expected to emerge between Telecom and AAPT. This offer aims to provide an opportunity for those shareholders who would like to sell all or part of their shareholdings for their own personal liquidity or other reasons."

Deane said the realisation of synergies between Telecom and AAPT would improve with a higher level of equity interest. He predicted "a number of operational synergies", possibly including:

• Joint management of Australia-New Zealand voice traffic, and more efficient use of international bandwidth.

• Potential to leverage off common systems and infrastructure, knowledge sharing and joint buying power.

• Enhanced service offering for Australia-New Zealand corporates and a broader offering for AAPT's corporate customers.

• Potential to jointly develop each company's Internet operations.

• Potential for roaming on each company's proposed CDMA network.

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