PRESS DIGEST-Australian Business News - March 9
Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy.
THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)
Telecommunications giant Telstra (TLS.AX) is likely to continue to see its lucrative fixed-line revenues eroded according to analysts. The Australian Communications and Media Authority reports that young home-leavers are not installing fixed phone lines, instead they are opting for mobile phones or internet access for calls. In addition, the Federal Government's initiative to build a national broadband network, which is expected to replace the majority of Telstra's copper-based network, will most likely be operated by another company. Page 13.
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The development of Western Australia's (WA) iron ore is set to receive a boost with the approval of a new deep-water port at Oakajee, in the state's mid-west region. WA Premier Colin Barnett has indicated the state will pay up to half of the A$678 million required to build the facility on the basis the Federal Government provides the remaining funds. Joint venture partners Mitsubishi and Perth-based Murchison Metals won the tender to build the port, and full approval is expected within three weeks for the project to proceed. Page 13.
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The future of the proposed merger between drug manufacturer Progen Pharmaceuticals (PGL.AX) and biotechnology company Avexa is in doubt, with rival Cytopia trying to block this week's shareholder vote. Cytopia, which had previously courted Progen, has promised a A$1.10 a share buyback of any unspent funds Progen had raised to develop its liver cancer product PI-88. Cytopia has also called a shareholder meeting on March 27 for its proposal to be considered. Page 16.
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Adelaide based oil and gas producer Santos (STO.AX), may consider taking on partners to reduce risk in developing its two 100 percent owned Bay of Bengal deep-water sites off India's east coast. Managing director David Knox declined to comment on whether a process was under way to sell stakes, but he confirmed the importance of the sites to his company last month, saying "these assets are the anchor of our Indian portfolio." In February, Santos said it planned to spend A$70 million over 8 years on exploration in India. Page 16.
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THE AUSTRALIAN (www.theaustralian.news.com.au)
Australia's biggest franchiser of video stores has warned up to 200 video and DVD stores may close this year due to the impact of the global downturn. Franchise Entertainment Group, owned by founder Paul Uniacke, runs approximately 800 Video Ezy and Blockbuster stores that control about 65 percent of the home video rental market and 15 percent of retail movie sales. "Just look around your local high street, how many DVD rental shops have closed in the past few months," Mr Uniacke said. Page 19.
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Melbourne-based explorer Jervois Mining (JRV.AX) will hold an extraordinary general meeting on April 2 at which shareholders will decide whether to overturn the board and sack the company's managing director. A group of concerned investors, which includes board member Richard Campbell, calling itself Jervois-vision2009 launched the drive against the company's existing management team after it failed to finalise a funding deal last year with China Railway Group. If the rebels are successful they will install mining entrepreneur Norm Seckold as executive chairman. Page 19.
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Australian beer sales volume has increased for the first time in 15 years, according to financial services company Citigroup. A major factor in the result is believed to be last year's tax hike on pre-mixed spirits which resulted in the shelf price rise of A$1 a can of ready-to-drink (RTD) products. Citigroup analyst Craig Woolford says that while most RTD drinkers seem to have begun mixing their own drinks since the tax increase, some drinkers have made the switch to beer. Page 20.
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Australian hedge funds are reporting one of their best performing years, according to a study of 210 funds by Australian Fund Monitors (AFM). On a rolling 12-month average hedge funds achieved a negative return of 13.11 percent versus the Australian Stock Exchange which returned a negative 33 percent movement over the same period. AFM says fund managers had adapted to the global financial crisis and the short-selling ban on financial stocks. Page 21.
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THE SYDNEY MORNING HERALD (www.smh.com.au)
Australian packaging manufacturer Amcor (AMC.AX) and New Zealand equivalent Carter Holt are believed to be in merger talks again, according to analysts. The renewed speculation follows the shelving of a new A$400 million paper mill at Botany and the redundancy of 60 managers by Amcor. The proposed merger would require the approval of the Australian Competition and Consumer Commission as it would raise concerns about a duopoly in Australia's A$2.2 billion cardboard box market. Page 19.
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The development of Queensland's liquefied natural gas (LNG) resources face an uncertain future due to the depressed price of LNG in today's market, according to analysts. Crude oil "which LNG prices reflect" was almost US$150 a barrel when global energy companies committed A$20 billion to develop Queensland into Asia-Pacific's new energy hub. However, the current oil price of US$40 a barrel is making capital-intensive LNG investments uneconomic, according to BBY analyst Scott Ashton. Page 21.
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The cash-strapped owner of Australian television broadcaster Ten Network (TEN.AX), Canadian media group CanWest, could hand effective control of its media group to lenders if it fails to meet its debt problems by Wednesday. Since winning a reprieve from creditors two weeks ago, CanWest chief executive Leonard Asper has attempted to sell assets and cut costs. However, some analysts are raising the possibility of bankruptcy. Page 21.
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National Australia Bank (NAB) (NAB.AX) will reveal its immediate plans for its British division this week when chief executive Cameron Clyne unveils his new strategy for the group on Thursday. NAB, the only Australian bank with a significant retail branch presence in Britain, has so far avoided the dire problems of the country's major financial institutions. Analysts expect Mr Clyne to announce the bank will retain its current structure and ownership level until Britain recovers from the global financial crisis. Page 19.
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THE AGE (www.theage.com.au)
Mining company Rio Tinto (RIO.AX) chief executive Tom Albanese has indicated that it will probably further delay its Oyu Tolgoi copper-gold venture. "It is likely that we might take more time in that construction phase given the current economic environment," Mr Albanese said. The Oyu Tolgoi joint venture with Ivanhoe Mines has been waiting on an investment agreement with the Mongolian government, and it is thought this will now be reached within days. However Rio is currently focused on three Queensland projects and repayment of debt. Page 1.
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Telecommunications giant Telstra has estimated the national broadband network will provide a short-term boost to the economy of about A$10 billion. The estimate, which was prepared by consulting firm Access Economics, and provided to a Senate committee hearing last week, projects "significant economic benefits" will flow into the economy between 2009 and 2020. Telstra was culled from the national broadband network tender by the Federal Government in December last year. Page 1.
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Australian manufacturers have pointed to the inequity of free trade agreements as a major contributing factor to their ongoing struggle to survive. Paul Dowling, executive director of the South-East Melbourne Manufacturers Alliance, says that despite free trade agreements other countries often do not allow Australian manufacturers access to their markets. "Our manufacturers are up in arms. If it were a level playing field, they wouldn't mind, but it's not," says Jo Kellock, of the Council of Textile & Fashion Industries of Australia. Page 1. --
Australia and New Zealand Banking Group (ANZ) (ANZ.AX) will contribute A$180 million as part of a A$253 million settlement-in-full with the creditors of failed broker Opes Prime. Negotiated with the Australian Securities and Investments Commission, the balance of the settlement will come from investment bank Merrill Lynch and cash recovered by Opes' receivers. Deutsche Bank analysts believe ANZ's existing bad debt provisions will be sufficient and the settlement will therefore have no impact on 2009 material earnings or capital. Page 3. --
