AAPT still for sale declares Telecom

Telecom has rejected a report that it has given up trying to sell its AAPT unit, saying the unit's future is still under review.

"It's more than speculation, it's wild speculation," Telecom spokesman Phil Love said yesterday.

The Australian Financial Review reported that Telecom had all but given up on trying to sell its struggling AAPT unit because it could not get its asking price of A$1 billion ($1.08 billion). The report said Telecom's price was A$400 million more than anyone was willing to pay.

Last month, the company said it would review AAPT's future and enter into formal discussions with interested buyers this month.

Love said the review has yet to begin, so rumours about scuttling a sale were premature. "We haven't even kicked off that process. We haven't even opened the gate yet."

Singapore Telecommunications-owned Optus, which this week purchased the 74 per cent of Virgin Mobile it did not already own, has been seen as the likeliest buyer.

SP Telemedia and Macquarie Telecom have also been identified as parties interested in some sort of purchase or alliance with AAPT.

The Australian unit has a book value of A$1.4 billion, but analyst valuations range from A$256 million to A$900 million.

The unit has struggled, posting a profit of only A$3 million in the year ended June 30, down from A$19 million a year earlier.

Analysts expressed doubt that Telecom had lost interest in selling the unit.

Macquarie Equities analyst Steve Hodgson said Telecom would "annoy" potential buyers by changing gears so soon after announcing an intention to sell the unit.

The company also wants to hold on to its transtasman business, which would involve complicated negotiations in any sale or partnership.

"When you put transtasman business into some sort of joint ownership, there's a lot of detail that needs to be worked out," he said. "That's a pretty complicated thing to pin down, and they want that or they won't sell it."

Forsyth Barr analyst Jeremy Simpson said the speculation could be the result of some jockeying for position. "There's not a large group of obvious buyers, so the most obvious buyer probably doesn't feel that they really need to pay up. You have to put things at a difference in ... what the two parties think the business is worth."

Telecom shares slipped 5c to $5.84 on the NZX yesterday.