Report: Telecom NZ puts AAPT on the block

Report: Telecom NZ puts AAPT on the block

Summary: Telecom reported to be having another bash at converting Australian business into cash.

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AAPT is on the market again, or so the story goes.

The Australian Financial Review is reporting that Telecom New Zealand has put its diminished Australian business out to market with Goldman Sachs managing the effort. 

Telecom, for its part, says through a spokesman it "won't comment on speculation or rumour".

A sale of AAPT has been long expected, and often rumoured, with Telecom likely to recoup a fraction of what it spent to buy the company at the height of the dot com boom in 1999, a whopping A$2.2 billion.

Then, in 2007, Telecom doubled down and bought broadband operator PowerTel for A$320 million and merged it into AAPT. Around the same time, it also tried, but failed, to sell AAPT

The AFR puts current expectations at between A$250 million and A$400 million, but that is after the 2010 sale of AAPT's consumer business for a mere A$60 million.

Suggestions AAPT could be back on the block emerged after Telecom axed much of its Australian Gen-i-branded IT services operation in March. 

In an August earnings call, Telecom announced it was reviewing its Australian strategy once again.

"In Australia, we also made portfolio shifts, rationalising our Gen-i Australia business to focus on trans-Tasman clients, while AAPT continued to focus on wholesale and business customers," Telecom said in its annual report to the end of June.

"By the end of FY14 we expect to have a clear strategic pathway for our Australian business"

The remaining rump of AAPT operates fibre optic networks across Australia. Telecom reported it had over 5,000 business and 300 wholesale customers.

AAPT reported earnings before interest, tax, depreciation and amortisation of A$57 million in the 2013 financial year, down by A$10 million or 14.9%. The decline was attributed to "customer churn, continued rationalisation of low-margin Wholesale customers, pricing pressure and market consolidation prior to NBN going live".

Topics: AAPT, New Zealand, Australia

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