Perhaps it’s a bid to sweeten up shareholders ahead of the NBN approval later this year.
Reach, a joint venture between the Telco and PCCW, yesterday agreed a deal which is “as part of an ongoing review of the company’s Asian assets to drive shareholder value,” involving the division of its assets.
It will result in an initial $50 million boon for David Thodey’s company followed by another $80-100m thereafter.
Reach will continue to manage the remaining joint assets, which are predominantly located in Hong Kong, where PCCW are based, the company said in a statement.
The deal, which more or less spells the end for the JV, created at the peak of the dot com boom in 2000, and largely viewed as a disaster from a Telstra point of view, will probably save the Telco from further losses in the long run.
Getting rid of the loss maker could be an attempt to sweeten shareholders ahead of the NBN deal approval which is earmarked for June this year, although delays are likely from the Telstra end due to bureaucratic issues.
Reach has been losing money continuously over the last few years following the demise of the tech boom in 2000, with Telstra forced to share $6m in losses last year alone.
“The restructure will give Telstra International Group greater control over the platform used to deliver end-to-end services, improving the quality of service offered to enterprise and global service provider customers.”
“Telstra anticipates recognising an accounting gain of $50m on signing and a further $80m to $100m on completion,” the company said.