Telstra reveals it will write down value of Asian joint ventures
July 13, 2001
Source: Associated Press
SYDNEY, Australia (AP) - Telecom giant Telstra said Friday itwould write down the value of its Asian joint ventures with HongKong's Pacific Century CyberWorks (PCCW) as the value oftelecommunications assets worldwide fall.
``Given current capital market and economic conditions aroundthe telecommunications sector, and for that matter the globalmarket generally, lower valuations of the joint ventures are likelyto impact Telstra's accounts,'' said chief executive ZiggySwitkowski. He did not elaborate.
Australia's largest telecommunications company also said thatits results for the first half of the 2001-02 fiscal year wereunlikely to be any better than those of the past six months.
Shares in Telstra fell 14 Australian cents (dlrs 0.07) to 5.26Australian dollars (dlrs 2.68) following the announcement.
Switkowski said the write downs were likely to be offset by``unusual items.''
Switkowski said the Regional Wireless Co and Reach Ltd ventureswith PCCW are key to its hopes for future revenue growth,particularly in the wireless and broadband service areas.
Telstra holds 60 percent of Regional Wireless with PCCW holding40 percent. The companies each own half of Reach Ltd, a broadbandinfrastructure provider.
Both joint ventures were formed last year as part of Telstra'songoing international focus with Asia offering potential to expandwireless, broadband and Internet protocol services, via jointventures.
``They offer us long-term growth in revenue and share holdervalue,'' Switkowski said.
Friday's announcement follows Telstra's advice on June 12 thatits earnings growth for the year would be slower than expected, awarning that shocked investors and sent shares tumbling to threeyear lows.
Switkowski said Friday that Telstra as a whole expected toproduce growth in earnings before interest and tax of around 5.5percent from its core businesses in 2000/01.
Revenue growth of 3.4 percent was anticipated and expense growthof two percent.
Telstra, which is 50.1 percent owned by the Australiangovernment, has been under stiff pressure in the past year to findnew and less regulated markets after facing official barriers athome which stopped it building on dominant positions in key sectorssuch as local calls and mobile phones.
Telstra, Australia's most profitable company, achieved a netprofit of 4.04 billion Australian dollars (dlrs 2.06 billion) in1999/00 and is expected to post a steady result in the year endedJune 30, 2001. |
