Vodafone is in talks with Telstra, Australia?s largest telecoms company, to acquire its New Zealand business, TelstraClear, in a deal analysts estimated could be valued at A$300 million- A$400 million (US$291 million- US$389 million).
Both companies cautioned on last week that discussions were continuing and that there was no certainty an agreement would be reached.
?Vodafone has entered into discussions with Telstra to explore a potential acquisition of Telstra?s New Zealand subsidiary, TelstraClear,? the UK-based telecoms group said in a statement. ?A further announcement will be made in due course, if appropriate.?
A disposal of TelstraClear?s mobile, internet and phone business to Vodafone would mark Telstra?s withdrawal from the New Zealand market.
TelstraClear, created in 2001 through of the merger of Telstra?s New Zealand arm, TelstraSaturn, with BT?s Clear Communications, is New Zealand?s second-largest full-service telecoms company, serving around 300,000 customers.
It would add to Telstra?s growing stockpile of cash. The Australian company said in April that it expected to generate A$2 billion to A$3 billion in excess free cash flow over the next three years, leading some analysts to speculate about possible acquisitions.
TelstraClear, meanwhile, has looked to trim operating expenses across the company after being hit by the costs of rebuilding its network in Christchurch, the largest city on New Zealand?s south island, which suffered an earthquake in 2011.
For the six months ending on December 31, the company posted earnings before interest, tax, depreciation and amortisation on a stand-alone basis of US$69 million, up 11% on the same period in 2010. Total income was down 4% to US$339 million.
Alex Ball, TelstraClear?s chief financial officer, said at the time that the company?s focus would be on ?top-line growth in the context of income declines?.
Telstra said in a statement on last Monday to the New Zealand and Australian stock exchanges that Vodafone initiated the sale discussions on TelstraClear. Both companies declined to make further comments.
Sagging demand in southern Europe last month prompted Vodafone to cut its growth forecast for 2013.
Poor economic conditions in Italy, Spain, Portugal and Greece forced the UK telecoms group to book a £4 billion impairment charge in its full-year results, which it blamed on a drop in spending by consumers and tighter government regulation.
The company cut its medium-term revenue growth target for the current financial year by 1 percentage point to between 0 and 3 per cent.