Telstra said to be eyeing Meridian's Oz business

Meridian Energy has put its Australian business up for review. Photo / Richard Robinson

Australian telecommunications provider Telstra is said to be eyeing up a potential purchase of Meridian Energy's Australian business, according to an Australian media report.

Meridian put its ownership of Meridian Energy Australia (MEA) under review in June with a view to a possible partial or full sale.

"As part of Meridian's strategic review of its Australian business, Lazard has gone out to the Australian market on behalf of Meridian Energy Limited to see what appetite there would be if we decided to sell part, or all, of our Meridian Australia business," a Meridian spokesperson confirmed to the Herald.

"No decision has been made on whether Meridian will sell, and an announcement will only be made when the review is concluded."

MEA is a vertically integrated electricity business owning 294 megawatts of renewable generation capacity, 150MW of renewable development opportunities and with a retail business branded Powershop Australia, delivering electricity to 140,000 customers and gas to 40,000 customers.

Telstra is believed to be considering an acquisition of MEA, according to a report in The Australian.

The publication noted the understanding was that Telstra was keen to participate in the auction for the Australian electricity retail and generation business as part of a move to increase its customer base.

Telstra is Australia's largest internet and mobile phone service provider with a A$47 billion market value.

It would likely partner with another group to buy MEA, according to The Australian which also report that others expected to line up as potential buyers include French energy company Engie and other financial acquirers.

The Herald has requested comment from Meridian Energy on the report.

Meridian hired financial advisory firm Lazard in May to review its Australian strategy amid energy margin pressure and a drop in earnings there.

Meridian owns and operates two windfarms and three hydro stations in Australia to support its Powershop retail arm.

Meridian is due to report its full-year result next Wednesday.

Last month a Jarden analyst report on Meridian forecast its full-year to June 30 ebitda to be $727 million, down from $854m in the 2020 financial year with a full-year dividend per share payout of 17.2c.

Jarden has a neutral rating on the stock and 12-month target price of $5.79. Meridian's shares closed on Thursday at $5.095.