TLS, TELSTRA CORPORATION LIMITED

[kathy]

Unfortunately the courier mail had more important newsworthy stories for its front page yesterday,in particular the half front page devoted to James Packer 's mishap complete with photo but, if you go to page 23 there is a small telstra article

[toilet]

TLS: Front page of the SMH and thus, impossible to ignore. This is (yet) another issue we’ve been banging the drum about for the past few weeks. The Herald has “broken” the story that TLS is in the throes of finalising a new business plan for Reach and that it may result in a bail out of sorts. Now, importantly, this is NOT NEW NEWS. we have actually met with the TLS CFO John Stanhope a week or so ago. He indicated THEN that the Reach business plan for 2004 would be finalised in the next 10 days (ie: before the end of this week). John highlighted 3 possible scenarios in relation to the future of the business: They were: 1) The Reach asset is placed in Receivership - Telstra buys back its share of the assets: We estimate A$400-600m (assumes the banks take a haircut on the US$1.2bn loan). 2) Reach remains a going concern, however Telstra is forced to take a writedown on its A$191m receivable (pre-payment of capacity made in April 2003) combined with a likely renegotiation of the debt with the banks (Telstra may have to make a capital contribution). Lastly, 3) Reach remains a going concern, however Telstra commits to payment of Reach AJC obligations (A$64m in FY04, A$100m in FY05, A$100m in FY06: in real dollars, you’re looking at around US$220mn). What do we think? We believe the likely scenario rests with Telstra writing off its A$191m receivable and contributing capital to the value of A$150-200m to reduce the US$1.2bn loan outstanding (with the banks also taking a haircut). The key issue in the negotiations with the banks remains PCCW's ongoing interest in the venture (remember PCCW at their full year results indicated that they would contribute no further capital to the venture). I know TLS is going ex a nice divvie in a few days, BUT there is a trade-off to consider here. Fundamentally, the implications of TLS following Option 1 means it will in effect have negative earnings growth. I don’t think the full implication has hit the market yet…

[kathy]

this is from the telecomasia.net site today


Telstra may take up stake in Malaysia's Maxis





March 18, 2004

Reuters

Telstra may fund a $1.2 billion bid by Malaysia's Maxis for smaller rival DiGi.Com, giving the Australian telco a foothold in Malaysia, a research report has suggested.

But its investment could come amid slowing growth in the Malaysian mobile market while bitter past experiences of foreign firms in the country may curb any excitement over such a deal, analysts and fund managers said.

None of the companies involved would confirm the report.

"We had one too many [bitter experiences]," said Nik Azhar Nik Abdullah of Commerce Asset Fund Managers.

Deutsche Telekom is still entangled in a $175 million arbitration claim against Celcom, a unit of Telekom Malaysia, almost a year after it sold out of the cellular phone firm.

In 2002, former Prime Minister Mahathir Mohamad blocked a 2.2 billion-ringgit offer by SingTel for a stake in Time dotCom.

A CIMB Securities report said Telstra would take a 20% stake in Maxis, Malaysia's top cellular phone firm by subscriber numbers.

Quoting unnamed industry sources, it said Maxis may pay between 5 and 6 ringgit a share for 61% of DiGi, currently held by Norwegian firm Telenor.

Based on Wednesday's close, that would represent a premium of between 12% and 34% on DiGi's price, valuing it at as much as 4.5 billion ringgit ($1.2 billion).

Maxis would issue new shares for the Telenor stake and for the rest of DiGi's stock and sell them to Telstra.

"We are as surprised as everyone else to hear this rumor circulating in the market," said a Maxis spokesperson.

"Hypothetically speaking, we will consider and evaluate potential investments that could bring and add value to our shareholders," the spokesperson added.

Telstra declined comment on the report and Telenor representatives were not available for comment.


Slowing Growth, Maturing Market

Malaysia's mobile phone subscriber base grew by about 20% to 11 million users last year, a penetration rate of 44% for a population of 25 million people, the third-highest ratio in Southeast Asia after Singapore and Brunei.

But growth is unlikely to match high double-digit figures achieved in the past as the market, worth some 10 billion ringgit in annual sales, nears saturation point at about 50%.

In contrast, Indonesia, which has a much bigger population, has a penetration rate of less than 10%, analysts say, making it a better bet for the Australian company.

Telstra, which is seeking to expand its overseas business amid a maturing local market, is one of the rumored bidders for Excelcomindo Pratama.

Still, the purchase of a 5% stake in Telekom Malaysia by Singapore's investment arm Temasek Holdings earlier this month, could be a catalyst for a Telstra-Maxis tie-up, Commerce's Nik said.

"The administration in Malaysia is more open toward foreign investment now," said Kenneth Tang, investment manager with Credit Agricole Asset Management.

Temasek's purchase has raised speculation that its unit SingTel may be allowed to buy a stake in a Malaysian phone company, probably Telekom's mobile arm Celcom.

COPYRIGHT: © Reuters 2004

[texas4qld]

[texas4qld]

[smarttrade]

sell TLS

[texas4qld]

[Smartman_plc]

[texas4qld]

[kathy]