Telecom New Zealand has agreed to sell Australian wholesale broadband unit AAPT to Sydney-based ISP TPG Telecom for A$450m (US$410m).
The deal values AAPT at about 6.4x its current recurring annual EBITDA of A$70m, the New Zealand incumbent said in a…
Telecom New Zealand has agreed to sell Australian wholesale broadband unit AAPT to Sydney-based ISP TPG Telecom for A$450m (US$410m).
The deal values AAPT at about 6.4x its current recurring annual EBITDA of A$70m, the New Zealand incumbent said in a statement.
Goldman Sachs was reported to be managing the sale process.
An analyst had previously speculated that Telecom NZ could struggle to fetch A$400m for the business, citing some of its ageing but still valuable fibre assets.
Telecom NZ acquired AAPT, which says it has 11,000 kilometres of fibre and 410 exchanges across Australia, in 2001 for A$2bn.
The New Zealand-listed telco first tried to sell the Australian unit, which has reportedly experienced several writedowns under its ownership, three years ago. However, only the consumer arm was sold to local ISP iiNet for A$60m (US$58m).
Telecom NZ CEO Simon Moutter said AAPT is now “performing well” following management efforts to stabilise it and focus on its wholesale and corporate businesses.
AAPT CEO David Yuile added he believes AAPT is well positioned in the Australian market “after several years of hard work and tough decisions”.
The sale, set to complete on 28 February 2014, is in line with Telecom NZ’s redefined strategy to become “a future-oriented, competitive provider of communication, entertainment and IT services delivered over its networks and cloud”, it said in a statement.
Besides TPG, iiNet, telecoms retailer M2 and Vodafone Australia had also been mooted as potential buyers.
Telecom NZ expects sale proceeds will be used to repay debt but intends to provide further details at its H1 2014 profit announcement on 21 February. The telco noted that its strategic turnaround programme incorporates a conservative capital structure and sustainable dividend.
Moody’s said the sale announcement has no immediate impact on its rating for Telecom NZ, but said it will be credit positive when concluded, provided it leads to a permanent reduction in debt.
