update Telstra has made further investments in China, snapping up mobile and music businesses to bolster its plans to reach $1 billion in revenue from its Chinese media assets by 2013.
Telstra CEO Sol Trujillo
The telco this morning revealed it had acquired a 67 per cent interest in China M — a mobile content supplier to 350,000 customers daily — and Sharp Point, which provides technical services for China Mobile's mobile music platform. The combined value of the two acquisitions will be $302 million over the next few years.
Both businesses have strong links with the country's mobile providers, Telstra said, believing that owning them would land Telstra a central position in China's mobile data chain.
"Our success with the Telstra Next G network shows that Telstra knows how to offer customers a compelling mobile data experience. We are now exporting that expertise to China," Telstra CEO Sol Trujillo said in a statement.
It wouldn't be a one way flow, however. "We will also import some of the technology capabilities that they've developed to manage massive volumes at lower unit costs," Trujillo said.
Trujillo expected the revenues from China M and Sharp Point for the 2009 financial year to be around $100 million. These investments, added to those Telstra had already made in online real estate, automotive and consumer electronic assets, would achieve the $1 billion goal by organic growth, but Trujillo said there was scope for further acquisitions if suitable targets which fitted into the company's strategy could be found.
The acquisition would allow Telstra to benefit from China's growth which was scheduled to continue despite the financial crisis, Telstra Media group MD Justin Milne said. "Telstra is now well positioned to benefit from China's predicted near-term economic growth 6-8 per cent, as well as the expected rapid increase in the penetration of mobile phones and personal computers, and the imminent shift of Chinese consumers from 2G to 3G handsets," he said.
Trujillo denied that the asset grab was the company's attempt to negate the effects of its exclusion from the National Broadband Network (NBN). "It's been part of the strategy and it has nothing to do NGN or NBN or any other acronym you might have," he said.
He couldn't resist saying, however that the cost of being excluded from the NBN had been estimated at around $1 billion, which would be equalled out by the planned success in China. "We quantified those benefits out over a ten year period or so as being about $1 billion, and here we have a series of investments in China that will more than replace that and with I hope much less investment."
Telstra intended to fund the deal with existing cash facilities.