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Technology Stocks : PCW - Pacific Century CyberWorks Limited -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (1630)	7/15/2001 12:59:19 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

STOCKWATCH - Telstra lower after withdrawing NDC sale/MobileOne bid report 2001-07-14 Terms and Conditions Telstra Corp Ltd shares were lower in morning trade after the company announced it has withdrawn the sale of its subsidiary Network Design and Construction Ltd, dealers said. They said reports that its Regional Wireless Co joint venture with Pacific Century CyberWorks Ltd increased the bid for Singapore's MobileOne to 1.6 bln usd from 1.2 bln, was also seen negative for Telstra. At 11.10 am, Telstra was down 0.11 aud or 2.04 pct at 5.29. Cable & Wireless Optus was up 0.02 at 3.55. The S&P/ASX 200 was up 7.6 points at 3,400.2. Analysts said the withdrawal of the NDC sale indicates that Telstra had difficulty getting the price it was looking for. An analyst with a European brokerage said, "Taking NDC out of the market left Telstra with an asset that it does not want." He said in March last year, Telstra indicated it was looking to sell NDC for about 1 bln aud. "Telstra's expectation certainly has come down from that since then, but probably not enough. I suspect that Leighton Holdings Ltd offered 300 mln aud for NDC. Telstra probably would have sold it if it had got an offer of 400 mln," the analyst said. UBS Warburg Dillon Read analyst Mark Whittaker said the news confirms the market's concern that it will take some time for Telstra to resolve the NDC issue. He said the speculated price range for NDC is between 200 mln aud to 1 bln, and "of course Telstra would not be able to achieve 1 bln aud now. There is not much in NDC." Analysts said there are also worries that Telstra may have to overpay again for Asia assets following media reports that Regional Wireless Co raised its bid for MobileOne in the face of rival bid from Malaysia's Maxis Communications, which reportedly offered 1.4 bln aud with a higher cash component. The analyst with a European brokerage said there had always always been speculation before that "due to the lack of political friendliness between Malaysia and Singapore, any bidder from Malaysia won't be considered a serious contender." "Now that Maxis is willing to offer a higher cash component to secure the bid, Regional Wireless may have to pay (more than) the fair value of MobileOne," he said. He said if that happens to be the case, it would be contradictory to Telstra new managing director and CFO David Moffatt's comment made earlier this year that Telstra will not overpay for assets. The analyst said his house believes the fair value of MobileOne is 1.2-1. 25 bln usd. His house maintains a long-term fundamental discounted cash flow valuation of 6.25 aud per share for Telstra. But he also noted that sentiment in the company is also affected by concern over the possible write-down for its investment with PCCW. "There is still a lack of clarity on this," the analyst said, adding that Telstra's management has not replied to their requests for answers on this issue. "When Telstra formed the partnership with PCCW, the market believed that they paid too much. Now if they write down the investment, it will be accounting catching up with what the market was worried about. It will be confirming that Telstra overpaid," he added. UBS Warburg's Whittaker said whatever price Regional Wireless ends up paying for MobileOne, it is likely to be off balance sheet and will not affect the profit-and-loss account of Telstra unless Telstra consolidates the account, which he believes is highly unlikely to happen. plk/zr For more information and to contact AFX: www.afxnews.com and www.afxpress.com Terms and Conditions Copyright© 2000 LEXIS-NEXIS, a division of Reed Elsevier Inc. All rights Reserved.