Telstra writes off A$138 million of Chinese mobile business
Dec. 23 (BusinessDesk) - Telstra Corp., Australia’s biggest phone company, will write about A$138 million (NZ$186.2 million) off its China-based Octave mobile business.
Telstra bought 67% of Octave, which supplies consumer mobile content and technical services for mobile music, for A$259 million in February 2009.
The writedown follows a clarification of the impact of regulatory rulings in China which constrain the wireless application protocol (WAP) market, the company said. Neither the writedown, which will be recorded in its accounts for the six months ended December, nor the A$65 million capital gain from the September sale of its stake in Chinese real estate website SouFun will affect its profit guidance.
In November, Telstra said it expected “a high single-digit percentage decline” in earnings before interest, tax, depreciation and amortisation (EBITDA) on "flattish" sales for the year ending June 2011.
Telstra reported a 1% decline in EBITDA to A$10.85 billion for the year ended June 30 this year.
“Telstra remains focused on its investments in Asia. In Hong Kong, Telstra continues to see positive momentum in the mobiles business, CSL, with strong uptake of smartphones and the recently announced launch of one of the first LTE networks,” the company said.
“In China, Telstra's China online verticals business and LMobile, Telstra's China mobile content assets, continue to perform well,” it said.
Also today, Telstra announced Nerida Caeser, head of its enterprise and government division since June 2009, will leave the company and will be replaced by Paul Geason, currently head of the wholesale division and who has worked for Telstra since 1994. Glen Osborne, currently wholesale sales executive director, has become acting head of the wholesale division.
Telstra, which is dual-listed on the ASX and NZX, last traded in New Zealand at $3.70, down two cents from yesterday. The shares have traded between $3.24 and $4.40 during the last 12 months and have been on a downward trend since about mid-2008.