TelstraClear sale approved by regulators

Telstra said today it expected the sale of its wholly owned New Zealand subsidiary, TelstraClear, to Vodafone New Zealand would be completed shortly, after the transaction received the necessary approvals from New Zealand regulators.

The New Zealand Commerce Commission confirmed its approval today following earlier approvals from the Overseas Investment Office and the Ministry of Business, Innovation and Employment.

As outlined when first announced on 12 July 2012:

• The sale for NZ$840 million (A$667 million) will also see Telstra receive NZ$493 million (A$391 million) in cash via a pre-completion dividend.  The cash paid as dividend is already part of the Telstra Group’s consolidated cash position.

• The sale proceeds (A$667 million), but not the pre-completion dividend, will be incremental to Telstra’s previously stated expected three-year excess free cash flow of A$2-3 billion (subject to the NBN roll out schedule and market conditions).

• Telstra recorded an accounting impairment of A$130 million in fiscal 2012 which was triggered on announcement of the sale. In accordance with accounting requirements we have continued to consolidate the profits from TelstraClear until completion, which will total approximately A$30 million. These will be offset by an accounting impairment to the equivalent amount in fiscal 2013. A foreign exchange loss of approximately A$123 million will also be recognised on completion.

Read Telstra’s original announcement.

Note: Figures are based on an A$ NZ$ conversion of $1.26.