Telecom NZ sells AAPT – the big picture

Bill Bennett -

Telecom NZ did well selling its Australian AAPT business to TPG Telecom for A$450 million.

Although the amount is roughly one fifth of what it paid for AAPT in the 1990s, the sale price was higher than most observers and analysts expected.

Telecom NZ has been trying to get rid of AAPT for years. The unit lost its strategic value to the company years ago.

Whatever reason Telecom NZ once had to invest in Australian network assets finally evaporated after the Chorus demerger two years ago.

AAPT sales shows change of direction

The demerger signalled a change of direction for the company. This has accelerated under the new management team led by CEO Simon Moutter.

Moutter makes no secret of his goals. He aims for Telecom NZ’s brand to be synonymous with the internet. He wants to position Telecom NZ as the nation’s leading telecommunications retailer with a sharp focus on residential and commercial business.

An Australian network is not just a distraction, it also tied up capital which could be better deployed in New Zealand.

Fewer assets, more services

Moutter’s strategy is less about owning network infrastructure assets like those in the Cook Islands and more about selling mobile and broadband services. The delivery mechanisms are becoming less important than the products and services they enable. He wants to build a more competitive operation that does a better job of looking after customers.

The AAPT picture is only one of a string of strategic moves made in the past year:

  • In May Telecom NZ’s Gen-i unit sold the Davanti consulting business in a management buyout.
  • Geni-i also sold the Auldhouse training business in October.
  • In April Gen-i paid almost $100 million to buy the Revera data centre business.
  • As part of these changes there was a major restructure in the Gen-i unit including a substantial reduction in the size of its Australian operation.
  • Recently Telecom NZ invested in Sir Ray Avery’s Vigil medical monitoring business.

Telecom NZ also reduced staff numbers by around 1200 people during 2013.

Telecom still owns a small five per cent stake in VHA, Australia’s third, somewhat troubled mobile carrier. You can rest assured that is for sale.