Telstra to split into three, seeks buyer for mobile towers
[SYDNEY] Australia's biggest telecom firm Telstra Corp said on Thursday it will split into three units and divest its mobile towers from next year citing heightened demand for assets, sending its shares up more than 8 per cent.
Telstra, which due to the Covid-19 pandemic had to suspend cost-cutting, hand out free data, and halt the charging of overdue fees to customers, has also struggled to compete with new technology with its ageing fixed-line infrastructure.
"The challenges and disruptions of the last 6-12 months have reinforced the increasing value of infrastructure assets globally," Telstra chief executive officer Andrew Penn said.
"Our proposed new corporate structure reflects this new world." The three new units will be infrastructure assets, mobile tower assets, and radio access network and spectrum assets, the company said. The break-up was expected to be completed by December next year.
From 2021, Telstra said it would seek to "monetise" the mobile towers "given the strong demand and compelling valuations for this type of high-quality infrastructure."
Goldman Sachs values the towers at about A$4.5 billion (S$4.45 billion).
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While Telstra dominates Australia's mobile and broadband markets, its mainstay fixed-line business has been under pressure from the rollout of a state-owned National Broadband Network (NBN).
The pandemic has driven businesses and entertainment online, but pressured telcos to spend more to service surging demand.
With fixed pricing structures, it has also left them with no quick way to monetise the investment.
As a result, Telstra froze job cuts in March and brought forward capital spending at a time when most other Australian firms were cutting costs.
"Separating its towers from fixed assets is a good move because the potential divestment of fibre assets will depend on NBN Co privatisation, which may not happen until the next election," Jefferies analysts said in a note.
However, they said the potential valuation for tower assets would depend on how much control Telstra would have on access from third parties.
The Melbourne-based company's shares were 7 per cent higher at A$3.19 in afternoon trade, their highest price since mid-August.
REUTERS
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