Telstra braces for Asian joint ventures impact
By AAP
Australian telecommunications giant Telstra Corp has warned that it would have to writedown the value of its Asian joint ventures.
Chief executive Ziggy Switkowski said that the ventures were performing to plan, however lower valuations would impact Telstra's results for 2000/01.
Telstra's key Asian joint ventures are with Hong Kong based Pacific Century Cyberworks Ltd (PCCW). Telstra has a 50 per cent interest in internet infrastructure joint venture Reach, and a 60 per cent interest in Regional Wireless, which holds the mobile business CSL.
"Given current capital market and economic conditions around the telecommunications sector and for that matter the global market generally, lower valuations of the joint venture are likely to impact Telstra's accounts," Dr Switkowski said.
However the combination of a book profit on the sale of Telstra's Global Wholesale business into Reach and other positive unusual items more than offset any write down of Telstra's investment in CSL and will positively impact Telstra's 2001 reported result, Dr Switkowski added.
Telstra also confirmed on Friday that it expected to meet its reduced results forecasts for 2000/01.
"We confirm our preliminary operating results are in line with the recent full year profit guidance," Dr Switkowski said.
"That is, our full year results for core operations are expected to produce revenue growth of 3.4 per cent, expense growth of two per cent and EBIT (earnings before interest and tax) growth of around 5.5 per cent," he said.
"The second half of fiscal 2000/01 saw revenue growth of just under two per cent and EBIT up one per cent," Dr Switkowski added.
Last month, Telstra said that its EBIT growth would not be as strong as the double digit growth originally expected.
Shares in Telstra suffered major falls after that announcement, reaching three year lows last week.
Dr Switkowski said that the Reach joint venture was achieving its target for earnings before interest and tax.
"CSL is also performing to its plan.." he added.
For calendar year 2001, the EBITDA from Reach was expected to be in the range of $US400-$500 million and for CSL $US150-170 million.
An enterprise value for both CSL and Reach had yet to be determined.
Dr Switkowski also said that Telstra expected capital expenditure would be $4.1 billion in 2000/01, excluding investments and third-generation spectrum. |
