Analyst gives Spark the nod for flicking off Telecom Rentals
TRL sold to FlexiGroup for $106 million.
Spark has entered into a conditional agreement to sell Telecom Rentals (TRL) for $106 million to Australian financial services company FlexiGroup.
TRL has pre-tax earnings of nealy $5 million a year, Spark says.
The wholly-owned subsidiary was set up in 2006 to lease IT and telecommunications equipment.
The agreement is expected to be completed by April 30, and requires a change of control consent from the Ministry of Education.
The sale price includes $92 million of net tangible assets and $14.5 million of goodwill, FlexiGroup says. It will be funded through cash and debt,
First NZ Capital research head Arie Dekker says the deal makes sense for Spark.
"It's consistent with the company's simplification of business away from non-core activities," he tells NBR.
"The sale proceeds will further strengthen a very robust balance sheet and increases the potential for capital return at some point in the next 12 to 18 months once Spark has got increased comfort on where earnings settle, fully canvassed potential growth investment opportunities, and got through the current regulatory process on copper, including uncertainty around final pricing and potential for backdating."
Mr Dekker has an underperform rating on Spark and a $2.94 12-month target.
In mid-morning trading, the stock [NZX:SPK] was flat at $3.29.
The Moutter regime has also seen Spark sell its remaining stake in Aussie telco AAPT, for nearly $500 million, and its stake in Cook Islands Telecom for $23 million.
Chris Keall
Wed, 04 Mar 2015
Wed, 04 Mar 2015
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Analyst gives Spark the nod for flicking off Telecom Rentals
45715