Telstra, CyberWorks May Write Down Joint Assets, Investors Say
By Mathew Carr
Melbourne, July 10 (Bloomberg) -- Telstra Corp., Australia's biggest phone company, and Hong Kong's Pacific Century CyberWorks Ltd. may write down the value of their $9.5 billion mobile and cable joint ventures, investors said.
The two companies are expected to reduce the value of their Reach Ltd. and Regional Wireless Co. investments, reflecting a global slump in the value of phone assets. The Bloomberg Europe Telecommunications Services Index has tumbled 52 percent this year while the Bloomberg U.S. Telecommunications Services Index fell 9 percent.
There's ``a lot of talk about Telstra taking a write down on its CyberWorks joint ventures,'' said Albert Hung, who helps manage about $416 million at Tower Asset Ltd.
Telstra told analysts last October that its Reach cable venture was worth $6.5 billion, including $5.7 billion of goodwill. Credit Suisse First Boston valued Reach at $3 billion to $5 billion in a research report last month. CyberWorks said Reach ``may require an adjustment to the carrying value,'' in a statement it released July 2.
CyberWorks and Telstra invested in joint ventures set up in February to expand their mobile and cable businesses in Asia. Reach owns more than 50 undersea cables linking Asia with North America and Europe. Regional Wireless, 60 percent owned by Telstra, owns Hong Kong's second-largest mobile network.
CyberWorks stock handed investors a 53 percent loss this year while Telstra lost 18 percent.
On June 12, Telstra halved its operating profit growth forecast to 5 percent for the year ended June 30.
Since June 12, Telstra shares have fallen 21 percent, wiping A$18 billion from the value of Australia's largest company. It touched A$4.96 yesterday, its lowest since February 1998, before rising to A$5.30.
In October, Telstra said Regional Wireless had gross assets of $3 billion. |
