Telstra pays US$254m for 51pc of mainland portal

PUBLISHED : Friday, 01 September, 2006, 12:00am
UPDATED : Friday, 01 September, 2006, 12:00am

Telstra Corp, Australia's biggest telecommunications company, expanded its reach outside its domestic market yesterday with the US$254 million purchase of a 51 per cent stake in Chinese real-estate internet portal

Telstra, which is seeking to counter declining sales at home, said its Sensis search engine would manage Beijing-based SouFun.

'SouFun provides an attractive entry point into China, allowing Sensis to leverage core capabilities into a larger, faster growing and less mature market than Australia,' Telstra chief executive Sol Trujillo said.

Telstra chief financial officer John Stanhope said SouFun was expected to contribute net revenue and earnings before interest, tax, depreciation, and amortisation of A$52 million (HK$300 million) and A$18 million next year.

SouFun, founded by chief executive Vincent Mo in 1999, generates revenue by online advertising for real estate and home furnishings.

Government efforts to cool the mainland property market led some analysts to question the purchase. 'The whole [property] sector including the related online advertising market will face a big challenge next year,' Morgan Stanley analyst Richard Ji Weidong said.

Mr Mo will retain 30.9 per cent share after the acquisition. Venture capital firm IDG holds 14.7 per cent.