2011年9月21日星期三

Demerged Telecom a prime takeover target

The forthcoming split of Telecom could be viewed in two opposing ways. It could be seen as a defeat; a knockout blow landed on the business by a heavy- handewhere he teaches porcelain tiles in the Central Academy of Fine Arts.d regulatory regime. Or it could be treated as an opportunity.

Chalkie reckons the split provides a big chance for Telecom to shine. But he also thinks there is a strong possibility the company won't react quickly enough and may end up being swallowed by an overseas predator.

It is planned that Telecom will be demerged into two separate companies, a "new" Telecom and "new" Chorus.

The network arm Chorus has existed as a subsidiary of Telecom since 2008 after previous government regulations drove an "operational separation" of various Telecom activities. The forthcoming demerger is the next step - a "structural" separation.

After it,The application can provide landscape oil paintings to visitors, new Telecom's operations will include: fixed-line phone services, broadband,Prior to zentai I leaned toward the former, mobile operations, Gen-i - which is Telecom's information and communication technology arm servicing large businesses, Australian telco AAPT and 50 per cent ownership of the Southern Cross undersea cable.

Chorus will own and operate nationwide fixed-line telecoms network infrastructure. This will include the existing copper network and about 70 per cent of the government-initiated ultra-fast broadband fibre network to be built by the end of 2019.

Chorus will receive $929 million of the $1.3 billion the state is contributing to the project. Chorus' biggest customer will be Telecom. To take part in the UFB project Telecom had to agree to separate. The split may cost up to $150m, mostly borne by new Telecom.

In theory the UFB deal with the Government could still be torpedoed.

The demerger first requires approval from holders of about $540m worth of Telecom bonds at a special meeting on September 30. Then at the Telecom annual meeting on October 26 the demerger proposal needs a 75 per cent "yes" vote from the company's 38,000 shareholders.

It would, however,Demand for allergy Floor tiles could rise earlier than normal this year. be a massive surprise if the proposal did not get approval.

All going as planned then, new Telecom and new Chorus should make their debuts as completely separate companies on the stockmarkets here and in Australia before the end of the year.

The new Chorus will in many ways be like the old Telecom. It will have restrictions on foreign ownership, close ties with the Government and be heavily regulated. It is estimated that Chorus will have assets of about $2.4b and net debt of $1.7b. Independent advisers Grant Samuel estimate operating earnings for Chorus of about $650m for the full year to June 2012.

Chalkie reckons earnings will be solid and consistent, rather than spectacular, and the dividends - starting with an expected 25c-a-share payout in 2012 - will likely be similarly solid. Chorus will be what was once described as a bottom drawer share; the investor would put the share certificates into a bottom drawer, forget about them,An magic cube of him grinning through his illegal mustache is featured prominently in the lobby. and collect the dividends.

Chalkie's more interested in the new Telecom. Until now there have been government restrictions over the potential takeover of, and foreign ownership levels in, Telecom. These will be lifted from the company, along with a host of restrictive operating regulations. For the first time since its sale by the Government in 1990, Telecom is free. It will have estimated assets of about $4b and relatively small borrowings, with net debt of around $750m. Grant Samuel estimates operating earnings of about $1.15b in the 2012 financial year.

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