What about this one? Maurice. Is it good for QCOM right away? Or they will do WCDMA and benefit QCOM indirectly.
12/14 19:48
Telecom N.Z Wants to Buy C&W Optus Mobile Assets (Update1)
By Tracy Withers
Wellington, Dec. 15 (Bloomberg) -- Telecom Corp., New Zealand's largest phone company, said it wants to buy the $6.2 billion mobile phone business of Cable & Wireless Optus Ltd.
In September, Sydney-based Optus, Australia's No. 2 phone company, said it would consider offers for its cellular, consumer and data businesses. London-based Cable & Wireless Plc, which owns 53 percent of Optus, wants to focus on corporate and government customers, where profit margins are higher than in consumer telephony.
Chief Executive Theresa Gattung said in a statement that Telecom ``is primarily interested in Optus Mobile although we recognize that any transaction we might undertake would need to be part of the overall restructuring'' of Optus.
Telecom has been expanding its business outside New Zealand as part of a plan to offset slowing growth and increased competition in its domestic market. This year it completed the $1 billion purchase of APPT Ltd., Australia's No. 4 phone company.
``It's about getting critical mass in that Australian market and you can't do it with AAPT alone,'' said Andrew South, who manages about NZ$250 million ($107 million) of shares for BT Funds Management Ltd. While the strategy is the correct one, South said, it remains to be seen how effectively it will be executed.
Gattung said Optus's restructuring is likely to be complex, and involve other parties as well as Telecom. ``We have a number of alternatives for structuring and financing any involvement,'' she said. No details of the terms and conditions contained in the response were released.
`Joint Venture Approach'
Optus's three key assets are valued at $11.5 billion by Macquarie Research Equities. That consists of $6.2 billion for the mobile division, $3 billion data and $2.3 billion for cable and multimedia.
``I believe the size of the deal necessitates a joint venture approach, particularly in view of the other calls on Telecom's resources, including the acquisition of AAPT and the roll out of its new mobile network,'' said Mark McDonnell, a telecommunications analyst at Burdett Buckeridge Young Ltd.
Telecom stock fell 1 percent to NZ$5.25.
Telecom said Dec. 1 that it was prepared to jeopardize its ``A+'' credit rating by taking on more debt to fund an acquisition. Ratings agency Standard & Poor's has already warned that the company will need to fund acquisitions by a mixture of debt and equity to maintain its rating.
S&P said last month that acquisition of AAPT left Telecom with reduced earnings and operating cash flow. Telecom said Nov. 17 that it had total borrowings of NZ$4.3 billion and total assets of NZ$8.1 billion, a debt to asset ratio of 53 percent.
Executive Team
Telecom has been linked in newspaper reports with NTT DoCoMo Inc. of Japan in a joint bid for Optus. Singapore Telecommunications Ltd. and Vodafone Group Plc have also been linked to the transaction. DoCoMo is next month sending a team of executives to Australia to examine Optus's mobile asset, said broker BNP Paribas yesterday.
Vodafone might separate its networks into a wholesale division to give competitors access to one of the two mobile networks it would own as a result of the merger of the two businesses, the Sydney Morning Herald newspaper said today, without citing sources.
SingTel might try to replace Cable & Wireless Plc as Optus's main shareholder, the newspaper report said.
Telecom is one-quarter owned by New York-based Verizon Communications. Its advisers include Sydney-based Macquarie Bank Ltd. Optus is being advised by Chase Ord Minnett and Cable & Wireless Plc by Merrill Lynch & Co.
Optus shares rose 6 cents, or 1.6 percent, to A$3.85. |
