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Telstra monetises AUD 1bn of assets as part of 'T22' strategy

By Josh White

Date: Friday 16 Aug 2019

Telstra monetises AUD 1bn of assets as part of 'T22' strategy

(Sharecast News) - Australian telecoms provider Telstra announced that it had reached AUD 1bn (£560m) in asset monetisation on Friday, as it reported the establishment and part-sale of an unlisted property trust to own 37 of its existing exchange properties.
The ASX and NZX listed former state telephony monopoly said that as part of the transaction, a Charter Hall-led consortium would acquire a 49% stake in the new trust for AUD 700m, reflecting a capitalisation rate of 4.4% and valuing the entire property trust at AUD 1.43bn.

Its chief executive officer Andrew Penn said the agreement showed further progress against the fourth pillar of the company's 'T22' strategy.

"When we announced our T22 strategy in June 2018 it included the goal of monetising up to AUD 2bn of assets to strengthen our balance sheet," Penn said in a statement.

"Since then we have been working to unlock the true value of some of our assets and today's agreement, when completed, will take us to around the AUD 1bn mark."

Telstra said it would retain ownership of a 51% controlling interest in the property trust, and operational control of the properties.

It would sign long-term triple-net lease arrangements with the trust, providing it with a "stable flow" of payments.

The leases would have a weighted average lease expiry of 21 years, with multiple options for lease extension to accommodate the firm's ongoing requirements.

Telstra said the transaction was expected to be completed by the end of August.

The company said it had also reached an agreement to sell part of its portfolio of data centres in Europe and Asia to global private equity firm I-Squared Capital, which owns HGC Global Communications.

The three data centres predominantly provided services to Telstra's international enterprise customers, the board explained.

HGC Global Communications, which would become the operator of the data centres, was the second largest fixed line telecom operator in Hong Kong, with an existing data centre presence in Asia, an in-country network in Hong Kong and an international connectivity business.

Telstra said that agreement remained subject to a number of conditions precedent, and if those were satisfied, it expected the transaction to be completed in the first half of the 2020 financial year, with estimated proceeds from the sale of around AUD 160m.

The board said that, combined with recent changes to Telstra Ventures, the sale of the Edison Exchange building in Brisbane, and other smaller transactions, the total value of assets monetised as part of the T22 strategy was now around AUD 1bn.

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