As part of the deal, Vodafone NZ will acquire TelstraClear’s voice and data based services, network infrastructure and New Zealand customer-base.
Telstra CEO, David Thodey, said there is a strong strategic rationale for the transaction that its shareholders can benefit from.
“The transaction is consistent with Telstra’s overall strategy and capital management framework that we outlined in April,” he said.
He claimed the sale proceeds will be incremental to Telstra’s previously stated expected three-year excess free cashflow of $2-3 billion, subject to the NBN roll out schedule and market conditions.
For Vodafone, its acquisition of TelstraClear is part of its ongoing global strategy to use fixed assets to support an integrated operation, especially in the enterprise segment.
As a result of the deal, and subject to completion adjustments, "Telstra will also record an accounting impairment of approximately $130 million in FY2012, and an additional impairment of approximately $130 million in FY2013 which is largely due to unrealised foreign currency losses.”
Telstra will also return about $380 million in cash to Australia via a pre-completion dividend, already consolidated in Telstra’s Group results.
Industry analyst, Ovum research director, David Kennedy, said the market will become more rational following the sale of TelstraClear and competition will be “kept alive and well”, as there will be two large integrated and scaled operators alongside smaller value-seeking players.
“Telstra’s withdrawal from the New Zealand market shows that scale and integration are needed to justify foreign network investments. Telstra has exited a difficult position in New Zealand, while Vodafone is now a worthy rival to Telecom New Zealand in both mobile and fixed,” he added.
The sale is expected to take a number of months to complete as it is dependent on New Zealand regulatory approval, including the New Zealand Commerce Commission, Overseas Investment Office and Ministry of Business, Innovation and Employment.