Telstra no longer sees Solution 6 as answer

SYDNEY - Telstra will not proceed with a plan to sell its e-business assets to its 24 per cent-owned associate, Solution 6 Holdings.

"Telstra and Solution 6 have agreed that their efforts are better spent progressing other e-business projects that the companies are working on together," Telstra told the Australian Stock Exchange.

The company had planned to roll some businesses into Solution 6 in exchange for a bigger stake in the group, but details were being renegotiated in April after the tech-stock fallout knocked share prices and asset values.

The assets included Telstra's eConnect business, the global rights to Telstra Financial Management Services and its 30 per cent stake in the PlesTel joint venture.

Under the initial plan, Telstra would have injected the businesses into Solution 6 in return for $A237 million ($312 million) of scrip at $A9.75 a share.

The decision not to proceed represents a further unwinding of what was once planned to be a three-way tie-up between Telstra, Solution 6 and Sausage Software to develop internet businesses.

A proposed merger between Solution 6 and Sausage fell apart on valuations after the tech-stock dive.

More recently, Telstra sold down its stake in share registry and financial market software group Computershare, but has entered into a strategic alliance with smartcard maker Keycorp.

Telstra said it and Solution 6 decided not to proceed after a review of priorities, changes in market trends and because of the need to accelerate investment returns.

Solution 6 appointed a new chief executive, Neil Gamble, on Monday following Chris Tyler's departure in May after a previous drug conviction and his association with failed Canadian company Lessonware came to light.

Telstra said it looked forward to working with Mr Gamble and saw Solution 6 as a core partner.

Solution 6 shares were fetching $A3.15 at close yesterday, after shedding 29c. Its year high was $A17.02.

Telstra shares were down 8c at $A7.20.