Telecom NZ Divestment of AAPT Consistent with Focus on Domestic Operations

Narrow moat-rated Telecom New Zealand, or Telecom, has announced the sale of its AAPT Australian operations for an enterprise value of AUD 450 million. The sale is consistent with Telecom's stated strategy of focusing on its domestic New Zealand operations. The transaction will be completed on 28 February 2014, meaning that AAPT will provide a full-period earnings contribution in fiscal 2014's first half, and a small contribution in the second half. Sales proceeds will be used to repay debt, and leaves Telecom very conservatively geared in our view. Net debt/EBITDA will be 0.57x in fiscal 2015, the first full clean year post sale.