No-one has confirmed or denied anything, but the dots are starting to join up. Telecom New Zealand is seeking buyers for its Australian AAPT subsidiary. Anonymous sources have been quoted by various media outlets confirming the plans, which would see a sale by Christmas.
It is no surprise. Telecom NZ has been trying to offload AAPT almost since it acquired it for $2 billion in 1999 – just before the market crashed. It has never fulfilled the hopes Telecom NZ had for it, and has had a tougher and tougher time of it as Telstra has rebounded and newer players like TPG and iiNet have surged.
But AAPT remains a valuable property. It has 11,000 km of fibre around Australia, with links between all major capitals and into 1500 premises. It has data centres around the country and it has a large services business, with 5000 business and 300 wholesale customers. But it also has an unprofitable voice business.
Telecom NZ sold AAPT’s retail business to iiNet in 2010 for $60 million, at the same time selling its own 19% stake in iiNet. But iiNet has not been mentioned as a possible purchaser of the rest of AAPT – the name being most widely mentioned is TPG.
TPG is on a roll. It recently announced record revenues and profits, and is approaching a billion dollars in annual revenues. It acquired spectrum in the recent digital dividend auction – the only other company besides Telstra and Optus to do so – and it has announced its own NBN-like fibre network to metropolitan apartment buildings.
AAPT’s fibre links would be a good fit for TPG, giving it substantial extra broadband and backhaul capacity. TPG’s David Teoh plays his cards very close to his chest, and has given no indication of any interest in AAPT, but many analysts have pinned his company as a likely buyer – because of the fit, and because TPG could afford it.
It is unlikely Telecom NZ would get more than $400 million for AAPT, after holding out for much more in recent years. The company announced uninspiring financial results in September and wanst to concentrate on its local business. In March of this year it cut back the Australian operations of its Gen-I IT division. Over 100 staff lost their jobs, with Gen-i Australia now concentrating on supporting large corporate customers with specific trans-Tasman IT services requirements.