(The following was released by the rating agency)
SYDNEY, July 12 (Fitch) Fitch Ratings has commented that today’s announcement by Australia’s Telstra Corporation Limited (Telstra; ‘A’/Stable) of the sale of TelstraClear, its wholly owned New Zealand subsidiary, is strategically sound and supports the company’s credit strength. Vodafone New Zealand has agreed to buy TelstraClear for NZD840m (equivalent to AUD660m), although the transaction is still subject to regulatory approval.
Recently, TelstraClear has been loss-making, with EBIT losses of NZD9m in the half year to 31 December 2011, and NZD28m for the full year to 30 June 2011. The proposed sale will generate capital that Telstra can deploy in other, more cash generative, and strategic investments.
In addition to the NZD840m to be received from Vodafone New Zealand, Telstra will keep NZD490m (AUD380m) cash currently held by Telstra on behalf of TelstraClear.
Fitch expects that the transaction will not affect FY12 dividend guidance. The sale proceeds will augment the AUD2bn to AUD3bn Telstra-defined excess free cash flow and provide greater financial flexibility in the transformation from fixed-line infrastructure incumbent to telecommunications and media service provider.