Is NBR Rich Lister Graeme Hart considering his biggest ever raid?
On the face of it, there are major barriers to New Zealand’s richest man making a play for Australia’s largest phone company, which has a market cap of $A33 billion.
Foreign ownership is restricted to 15%, for starters (though ironically, Telstra has an ex-pat Kiwi chief executive, Wellingtonian David Thodey - brother of ex-BNZ chief executive Peter Thodey).
But the AFR’s theory is that Mr Hart – or another private equity player – could buy out the Australian government’s remaining 10% stake in Telstra (held by its Future Fund) at a 30% premium or $A3.40 a share.
That would push Telstra’s market cap to $A42.3 billion, with roughly $A14 billion in debt. According to the AFR’s sums, with 8% cost of funding, there could still be a decent return if the dividend is trimmed, and the new owner tapped Telstra’s $A3.8 billion free cash flow.