Telecom's AAPT sale

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Telecom has announced the sale of part of Australian unit AAPT to rival iiNet for A$60 million ($75 million), confirming speculation it was unable to conclude its preferred deal to sell the whole company.

As well as selling AAPT's consumer division, Telecom said it had sold AAPT's 18.2 per cent stake in iiNet to institutional investors for A$70 million, A$11 million less than its carrying value as at June 30.

Combined with the proceeds from its sale of 10.1 per cent of Macquarie Telecom announced yesterday, the deals will realise about A$140 million.

Telecom had reportedly been seeking more than $400 million for AAPT as a going concern.

It will now concentrate on running AAPT's fibre network and the wholesale and business divisions, it said.

The sale of the consumer unit will reduce 2011 forecast earnings for AAPT by A$10 million, Telecom said.

AAPT was expecting earnings of A$101.3 million for the year to June.

Telecom CEO, Paul Reynolds, said: "Together these transactions rationalise non-core assets, strengthen Telecom's financial position, and help reposition AAPT's operations into a focused, network-centric wholesale and corporate business that is well-positioned for future growth."

A Telecom spokesman said the company was now ''taking stock''.

''We're happy with the transactions we've made,'' he said.

''That's not to say if a good offer [for the rest of the business] was put in front of us we wouldn't look at it seriously. But having done these transactions, which we're pleased with, we'll take stock.''

The buyer of AAPT's consumer business, listed Australian telco iiNet, said it expected the acquisition to boost earnings by A$20 million in the first full year.

AAPT's 113,000 broadband subscribers and 251,000 other connections would bring its broadband customers to 652,000 and total active services to 1.3 million, it said.

iiNet will continue to buy wholesale services from AAPT.

The transaction requires approval of iiNet shareholders and an extraordinary general meeting is expected to be held in September.

- © Fairfax NZ News