Telstra to sell CSL for $2.43 bn

Telstra today announced it had signed an agreement to sell its Hong Kong based mobile business CSL to HKT for $2.43 billion.

The sale, which is subject to regulatory approval in Hong Kong and HKT and PCCW security holder approval, would equate to proceeds of approximately A$2 billion for Telstra’s 76.4 per cent interest. HKT will also acquire the remaining 23.6 per cent shareholding held by New World Development.

Telstra chief executive officer David Thodey said Telstra had enjoyed considerable success in Hong Kong however this was a great opportunity to maximise shareholder value.

“CSL has been a strongly performing business, the compound annual revenue growth rate was 9.4 per cent over the last three years and we have gained market share. We are proud of CSL’s achievements. It has established itself as a premium brand and strong player in the market, last year adding 425,000 mobile customers,” said David Thodey.

“However, there are a number of dynamics in the Hong Kong mobiles market that means this is the right opportunity for Telstra to maximise our return on this successful asset,” added Thodey.

Thodey said Asia remained an important part of Telstra’s strategy and the company intended to be in the region for the long term.

“We want to leverage our domestic strengths to grow our global footprint. The team is focused on refining and enhancing our strategy across Asia and identifying further opportunities to build our capability in the region,” said David Thodey.

“We have seen significant growth in different parts of our business in Asia, including Autohome and Telstra Global, and our plans to grow our business in this region remain firmly in place,” added Thodey.

The sale of CSL is expected to generate a profit on sale of approximately A$600million. The net proceeds are incremental to Telstra’s free cash flow guidance of A$4.6billion to A$5.1billion in FY14.

Following completion, Telstra will address the net proceeds from the transaction consistent with its capital management framework.

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