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UPDATE 1-Telstra sells struggling NZ operations to Vodafone
* Telstra sells NZ business for NZ$840 mln
* Telstra says sale good fit for Vodafone
WELLINGTON, July 12 (Reuters) - Australia's Telstra said on Thursday it would sell its New Zealand operations to British mobile operator Vodafone, which will have more muscle to compete with Telecom New Zealand, the nation's dominant telecommunications company.
In the NZ$840 million ($669.65 million) sale, Vodafone New Zealand will acquire TelstraClear's voice and data-based services, network infrastructure and New Zealand customer base.
"The deal is a natural one, bringing together TelstraClear's fixed telecommunications and data products and corporate client-base with Vodafone New Zealand's mobile offering and retail customer base," Telstra CEO David Thodey said in a statement.
The sale will give Vodafone, which has been largely confined to just mobile services, roughly 30 percent of New Zealand's broadband market, heating up competition against Telecom , which currently controls just over half the market.
The deal was widely expected after Telstra and Vodafone confirmed last month the companies were in talks about the sale of the struggling TelstraClear.
Shares in Telstra, which is listed in Australia and New Zealand, were not traded on the New Zealand stock exchange after a trading halt was lifted after the announcement.
On Wednesday, they closed at A$3.860 on the Australian market, having climbed as high as A$3.875, its highest since late 2008.
Telecom shares slipped 1.0 percent after the announcement.
TelstraClear has been stung by lower revenues and high capital expenditures due to the costs of rebuilding its network infrastructure in Christchurch, which was devastated by an earthquake in 2011.
Telstra said it would return around NZ$490 million in cash to Australia by way of a dividend, and take a total A$260 million impairment charge over the next two years reflecting mostly foreign exchange loses.
Market participants had speculated Vodafone was interested in acquiring the 4G spectrum, required for high-speed mobile data services, which TelstraClear was expected to gain following the nation's shift to digital television that begins later this year.
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