KEY POINTS:
Speculation that Telecom might sell its Australian subsidiary AAPT swirled a little faster yesterday on confirmation Asian telco giant Pacnet is keen on a deal.
Pacnet chief executive Bill Barney was reported by the Sydney Morning Herald as saying the company was interested in buying AAPT.
Barney's declaration of interest followed speculation last week that Pacnet was offering US$420 million ($766.7 million) for the company.
"There was some truth to the rumour but it may not all have been true," Barney told the Sydney Morning Herald.
"AAPT is an interesting asset to us ... it does fit very well with our strategy so we would look at it."
Barney said Pacnet was interested in buying AAPT because of its network infrastructure but declined to say whether it had approached Telecom during recent weeks, although he said it was not talking to the NZX-listed company "at this time", the Sydney Morning Herald reported.
Telecom bought AAPT in 1999 for $2.2 billion, although a series of writedowns reduced its book value to $270 million.
Telecom also bought network company PowerTel for A$357 million ($429 million) to bolster AAPT's reach.
Forsyth Barr analyst Guy Hallwright said it was not clear what assets were involved in the speculated price tag.
"It's possible, for example, that they were talking about buying some of the PowerTel infrastructure assets at 420 million Aussie [dollars]," Hallwright said.
"It certainly seems clear that they wouldn't really be interested in the retail business of AAPT and it's also highly likely that Telecom wouldn't be interested in selling the corporate business out of AAPT, so it's not quite clear what we're talking about."
A complete sale of AAPT was unlikely, Hallwright said.
"On the face of it, if there is some duplicated assets there that could be sold and some cash realised out of that, obviously that would be positive," he said.
However, Telecom was not under pressure to do anything with AAPT.
"It's not performing very well at the moment but it's not falling out of bed either, it's kind of like holding its own, maybe gaining a little bit."
There could be a risk in selling assets to a potential competitor.
"It depends on what their target is basically," Hallwright said.
"They're based in Asia and presumably they're mainly interested in traffic flows up to Asia, which is probably not really what Telecom's doing much of."
Telecom spokesman Mark Watts said Telecom did not react to speculation.
"It's a long-standing policy," Watts said.
"We think all this chat is entirely that - it's speculation."
Telecom shares closed up 2c yesterday at $2.40.
* Going, going ...
- AAPT was bought by Telecom for $2.2billion at the height of the dotcom boom in 1999.
A series of writedowns has seen its value fall to just $270 million.
Telecom bought Australian network company PowerTel last year for A$357 million, coupling it with AAPT in a bid to extend its reach.
- AAPT's underlying ebitda for the three months ending September 30 was A$13 million, down 24 per cent - a fall Telecom attributed to lower revenue and set-up costs from moving call centres to Australia.
