Govt approves Telecom-Chorus asset allocation plan
Company takes first concrete step toward split.
The government has approved Telecom's plan for divvying up assets between its soon-to-be-spun off Chorus division and the remainder of the company - the first major step toward the company's "demerger".
A draft version of the asset allocation was released by the MED and Telecom during the last week of July. Analysts found no surprises in the document. Its most significant feature is perhaps that "New Telecom" will control the country's 30 largest phone exchanges (out of around 770 nationwide; "New Chorus" will hold the remainder).
Analyst Guy Hallwright noted that New Chorus will include the local access network, regional backhaul (but not national backhaul), UBA wholesale and regulated data wholesale. New Telecom (the retail business) will include everything else, including the mobile networks but excluding mobile backhaul shared with the fixed network.
Telecom is obliged to split itself into separately-listed retail ("New Telecom") and network ("New Chorus") companies as a pre-condition of participating in the government's $1.35 billion ultrafast broadband (UFB) project.
Mr Hallwright said New Chorus will be set up new asset values established at the time of its inception, and all Telecom receivables and payables prior to separation remaining with New Telecom. However, the debt split between New Telecom and New Chorus has not yet been disclosed.
Telecom has previously said that it aims to demerge New Chorus by the end of 2011, subject to debtholder and shareholder approval.
New Chorus vs New Telecom
In Telecom's annual result announced August 19, Chorus had ebitda of $806 million (+5%). Telecom Wholesale, most of which is being rolled into Chorus, had ebitda of $119 million (-42%) for a combined $925 million.
The remaining divisions, which will constitute "New Telecom" (Retail, Gen-i, APPT and Corporate) reported combined ebitda of $876 million.
Telecom shares [NZX:TEL] were up 0.9% to $2.79 in mid morning trading, hitting a fresh 18-month high.
Chris Keall
Tue, 30 Aug 2011
Tue, 30 Aug 2011
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Govt approves Telecom-Chorus asset allocation plan
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