Telstra writing down ventures with CyberWorks
( 2001-07-16 11:08) (7)
Telstra, Pacific Century CyberWorks' partner in Asia, will this year make provisions for their two joint ventures as the value of telecommunications assets fall.
The size of the Telstra write-down, to be determined, could serve as a reference as to whether CyberWorks needs to follow suit with its financial statement this year.
On Sunday, in a statement to the Australian Stock Exchange, Telstra confirmed month-long speculation about the lower valuations of its two joint ventures with CyberWorks -- Reach and CSL -- being "likely to impact on Telstra's accounts".
However, it said the sale of Telstra's Global Wholesale business into Reach and other items would "more than offset any write-down of Telstra's investment in CSL and will positively impact on Telstra's reported results".
The company said it was waiting for a Securities and Exchange Commission ruling in relation to accounting treatment of joint ventures or acquisitions -- determining an enterprise value for both Reach and CSL. In February, Telstra paid CyberWorks US$1.68 billion for a 60 per cent stake in CSL, the mobile phone arm of CyberWorks. It valued the business as high as US$3,900 per subscriber.
The company also set up an Internet protocol joint venture with CyberWorks, which is known as Reach. Telstra said Reach was largely achieving its operating target and CSL was performing to plan.
In the year to June 30, Reach had ebitda (earnings before interest, tax, depreciation and amortisation) of between US$400 and US$500 million, while at CSL its was between US$150 and US$175 million.
Analysts said these sets of numbers were in line with market expectations.
They said CyberWorks could also make similar provisions on the two joint ventures.
A CyberWorks' official said provision was an accounting issue pertaining to
Telstra, and had no impact on the joint ventures' performances.
Meanwhile, the Telstra-CyberWorks mobile venture is reportedly raising its bid for Singapore's M1, to US$1.6 billion.
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