Telstra sells out of Sensis, CSL

Australian carrier Telstra on Monday announced the sale of its struggling directories business. The sell off comes just weeks after the company offloaded Hong Kong operation CSL.

The operator is to sell a 70 per cent stake in its directories business, Sensis, which offers Yellow and White Pages type services, to US based private equity firm, Platinum Equity for A$454m (€300m).

The sale excludes the company’s voice services business and Telstra will continue to provide certain communications services to Sensis. Telstra will retain a 30 per cent shareholding with Sensis that is now valued at A$649m.

The sale proceeds of A$454m are incremental to Telstra’s FY14 free cashflow guidance of A$4.6bn to A$5.1bn. Telstra expects to book an accounting loss on Sensis of approximately A$150m subject to completion and approximately A$100m is expected to be included in the December 2013 half year results with the balance accounted for on completion, which is expected in the second half of 2014.

Post completion Telstra will record its future share of 30 per cent of Sensis net profit after tax in its EBITDA.

In late December, Telstra also signed an agreement to sell its Hong Kong based mobiles business, CSL, to HKT Limited for $2.425bn.

The sale equates to proceeds of approximately A$2bn for Telstra’s 76.4 per cent interest. HKT will also acquire the remaining 23.6 per cent shareholding in CSL held by New World Development.

Commenting on the sale, Telstra Chief Executive Officer David Thodey said: “CSL has been a strongly performing business, the compound annual revenue growth rate was 9.4 per cent over the last three years and we have gained market share. It has established itself as a premium brand and strong player in the market, last year adding 425,000 mobile customers.

“However, there are a number of dynamics in the Hong Kong mobiles market that means this is the right opportunity for Telstra to maximise our return on this successful asset.”

Thodey said Asia remained an important part of Telstra’s strategy and the company intended to be in the region for the long term. The company recently increased its stake in Autohome an online destination for car consumers in China, and successfully listed it on the NYSE. Telstra’s investment in Autohome is now valued at $1.9bn.