TPG buys AAPT from Telecom NZ for AU$450m

TPG buys AAPT from Telecom NZ for AU$450m

Summary: TPG has emerged as the telco set to take AAPT off Telecom NZ's hands for AU$450 million.

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TOPICS: Telcos, TPG, Australia
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Telecom New Zealand is set to sell off AAPT at a fraction of the price it paid for the company back in 1999, with TPG stepping out to buy the company for AU$450 million.

Telecom NZ this morning confirmed to the Australian Securities Exchange that TPG would pick up the business telecommunications and cloud company by the end of February 2014.

The transaction was said to be "free of conditions precedent".

It had been reported that Telecom NZ had been looking to sell the Australian business since at least October, with Goldman Sachs recruited to manage the transaction.

Including the AU$60 million iiNet paid for AAPT's consumer division in 2010, the total value for AAPT is significantly lower than the AU$2.2 billion that Telecom New Zealand paid for it in the peak of the dot com boom in 1999.

AAPT's revenue has declined over the last few years, with the company this year reporting earnings before interest, tax, depreciation, and amortisation of AU$57 million, down by AU$10 million on the previous financial year.

Telecom New Zealand CEO Simon Moutter said that AAPT has been able to reduce costs and improve operations, and has just embarked on a revenue growth plan.

"AAPT is performing well. [AAPT CEO] David Yuile and his management team have done an impressive job during the last three years to simplify, stabilise, and reshape the company. By focusing on AAPT's wholesale and corporate businesses, the management team has grown the customer base and, most importantly, driven profitable growth," Moutter said in a statement.

Yuile said that AAPT had made a massive turnaround.

"We are very energised by the progress we have made and the massive turnaround AAPT has experienced after several years of hard work and tough decisions. AAPT is now ready for another chapter in its evolution, and we look forward to the future," he said.

The purchase of AAPT will provide the elusive TPG with a much larger backhaul network across Australia, as the company begins to embark on a fibre-to-the-basement rollout for 500,000 CBD businesses and apartments covered by TPG's existing fibre network.

In a statement to the market this morning, TPG highlighted that AAPT has 11,000km of fibre across six states and territories, with fibre access to 1,500 premises.

Executive chairman David Teoh said the purchase would provide new infrastructure to TPG.

"The incorporation of AAPT's inter-capital fibre into TPG's extensive CBD, metropolitan, and international network assets will further enhance TPG's position as an increasingly major force in the telecommunications market," he said.

The Australian Competition and Consumer Commission (ACCC) confirmed it will not be investigating the takeover.

"The ACCC has considered the proposed acquisition and decided that a public review will not be necessary," a spokesperson told ZDNet.

Topics: Telcos, TPG, Australia

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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  • i'm surprised the journo's haven't picked this up

    What TPG has bought is a gang of four voice peering. At present Telstra, Optus, AAPT and VHA have a setup that they can charge for ingress voice traffic into their network.

    This is worth approx $50m a year and can easily change depending on the flow of traffic (which is historically into the Telstra network). However considering that TPG has a massive network of voice customers I can see that this deal will work to their advantage.

    The other thing is that TNZ wrote down the AAPT deal about a decade ago. The loss from the $2.2b deal has been taken a long time ago and wouldn't have factored whatsoever in the deal between TPG and AAPT.

    What's surprising though is how TNZ didn't sell to iiNet. I really don't understand how Exetel, iiNet and Macquarie Telecom could dare to let someone like TPG take over one of the biggest wholesale suppliers in this country. So much wholesale bandwidth in TPG's hands. It'll be really interesting whether they maintain AAPT Wholesale as a going concern or intergrate it. There is a lot that goes on in AAPT that TPG hasn't absolutely no expereince with dealing with. Its a really complex place, so many legacy systems and complex tools and IT architecture.

    It'll be interesting to see who eats who really seeing that AAPT stands for All About PowerTel - ;)
    chugs@...