Telstra signals lack of intent to divest CSL
Australia's Telstra Corp said it had no plan to divest CSL in the near term and the unit would continue to focus on its 3G mobile business if it succeeded in merging with New World Mobile.
The message from Telstra chief executive Sol Trujillo follows a 9.3 per cent drop in the unit's operating income for the first half that ended in December as network depreciation and amortisation charges wiped out razor-thin revenue growth.
The company, which has proposed to merge with New World Mobile (NWM) in a $244 million deal still contingent on approval by NWM's shareholders, said last year that it might list the merged mobile unit in 2009.
Mr Trujillo's comments on CSL came as the Australian telecom giant reported a 10.3 per cent drop in first-half net profit to A$2.14 billion ($12 billion).
'In the case of CSL ... there was an overpayment of money for the assets received. That has passed,' he said.
'We strategically continue to look at CSL and improve the ... value position of that business ... [there will be] no planned divestments in the near term.'
Telstra paid US$2.15 billion for the mobile unit.
New World Mobile will have until the end of this month to send its shareholders a circular on the proposed merger. The merged company would become the city's largest mobile operator with 34 per cent share of a market that has over eight million users.
Telstra reported that CSL's operating profit fell to $342 million from $377 million a year ago.
But excluding depreciation and amortisation charges operating profit would edge up 0.8 per cent to $628 million from $623 million.
Revenue rose 0.7 per cent, or $16 million, to $2.19 billion due to 'significant revenue increases in data, international voice and prepaid revenue'.
'Under the merger, CSL will continue to drive the uptake of 3G services ... while addressing specific needs of different market segments,' the group said in its result statement.