Telecom NZ to buy PowerTel for $A357m

Stuart Corner
Wednesday, 31 January 2007 04:19

IT Industry - Deals

Marko Bogoievski, Telecom CFO, claimed that the deal would "provide significant benefits to Telecom by enabling AAPT to leverage its investment in service capability and it gives us the scope over time to bring more of our customers onto the combined access network rather than servicing them through wholesale arrangements."

Telecom anticipates that the acquisition of PowerTel will provide significant value to Telecom shareholders, with the acquisition expected to be EPS-positive within 12 to 18 months. The acquisition will be funded by a combination of cash and Telecom's existing debt facilities.

However Telecom shareholders have already suffered significant losses from the company's attempts to crack the Australian market. The value of AAPT has been written down by hundreds of millions of dollars since it was bought, and was at one time up for sale itself.

It is expected that the scheme documents will be sent to PowerTel shareholders by late March and that PowerTel shareholders will be asked to vote on the scheme in late April. Telecom has been advised by Citigroup.