Telecom International's voice business has been separated from its data business in preparation for a possible sale, chief executive Paul Reynolds said at the company's third-quarter briefing this morning. It is also possible that Telecom will partner wit
Telecom International’s voice business has been separated from its data business in preparation for a possible sale, chief executive Paul Reynolds said at the company’s third-quarter briefing this morning.
It is also possible that Telecom will partner with another company rather than selling Telecom International (TNZI), Dr Reynolds said.
Internal voice carriage was a high-growth but low margin business, said the Telecom boss, which was coalescing to a few big players.
NBR first reported rumours of a possible sale on March 25, at which point Telecom Wholesale chief executive Matt Crocket, now resigned, refused to confirm or deny (TNZI comes under the Wholesale division).
In a note to clients discussing the sale rumour First NZ Capital analyst Greg Main noted, however, that TNZI’s revenue was a modest $53 million in 2009 (up from $38 million in 2008). Ebitda is buried in Telecom Wholesale’s broader numbers.
Today, Dr Reynolds said TNZI contributed around $20 million ebitda to Telecom's bottom line.
AAPT still sort-of for sale
Asked about ongoing AAPT sale rumours, Dr Reynolds reiterated his previous comments that no board decision had been made to sell the Australian subsidiary, valued by analysts around $A400 million, but that Telecom would consider any offer in the interests of shareholders.
Commodity business, colourful strategy
TNZI is involved in a raft of international activity, including its support for Brymedia, a consortium bidding for Nigeria's state phone company, Nitel, which is up for privatisation (if Brymedia wins, TNZI will handle its international calling business).
Beyond the more colourful than usual location, its potential Brymedia contract would be more or less business-as-usual for TNZI, which brokers toll calls between phone companies around the world.
The Telecom division has been a quiet achiever in recent years, at least in terms of grabbing market share. When NBR last checked in (read Telecom’s secret plan for world domination), TNZI brokered around 5% of international calls, or around 5 billion minutes.
Mr Crockett told NBR that Telecom NZ is seen as neutral, which is why, say, a telco in France may trust TNZI to find it the cheapest way to route a toll call from Paris to New York.
Neither is consulting work new to TNZI, although its previously taken place in tonier locales. Mr Crockett name-checked Time Warner (which offers its customers voice calling over its cable network) as a marquee client. The US conglomerate has been investigating value-adds for its phone service and, more nefariously, Telecom NZ-style data caps for its users as video use explodes.
In fact Mr Crockett, who at the time was recently returned from Time Warner’s head office in New York, also arranged for Time Warner and France Telecom staff to talk to Keallhauled about TNZI (both raved).
Noting that Canada’s Rogers Communications was being mooted as a buyer, First NZ Capital's Mr Main said he expected Telecom to be reviewing its capital deployment.
If any assets were to be flicked off, then the TNZI could be one to go on the block. Mr Main described it as “non-core” compared to more strategic assets such as services division Gen-i and Telecom’s 50% stake in the Southern Cross Cable and its Australian subsidiary AAPT.
