SYDNEY,Dec. 20 (Xinhua) -- Australia's key telecommunications provider Telstra has dramatically pulled the plug on one of its core Asia-significant ventures on Friday, selling in its entirety a Hong Kong-based mobile business to the tune of more than 2 billion U.S.dollars.
Telstra made the announcement Friday that it had signed an agreement to sell its Hong Kong based mobiles business CSL to HKT Limited for 2.425 billion U.S.dollars.
Telstra (Corporation Limited) has long been a pillar of the Australian economy focusing on telecommunications and media. It has enjoyed limited success in Asia, despite a foray into China that saw it part-owner of key media platforms like Soufun.
Telstra reaped some 433 million U.S.dollars from the 2010 sale of its stake in the real estate website SouFun Holdings.
Telstra paid 254 million AU dollars(271.15 million U.S.dollars) for a 50.6-percent stake in SouFun in 2006.
Under CEO David Thodey, Telstra has sought to build and operate telecommunications networks and services after being fully privatized, listed, shunned, embraced and shunned again in its home base of Australia.
The 2 billion-dollar sale is a case of back to the future after Richard Li's HKT Ltd snapped up the opportunity to return CSL to its original owner.
Li is the junior son of Hong Kong mogul and multi-billionaire Li Ka-shing, who had entertained Telstra in the ambitious creation the Reach cable and satellite joint venture. The turn-of-the- century dot-com adventure forced Telstra into a 1-billion-AU- dollar write-off.
That unpleasantness will be just a bad memory with the CEO releasing a statement today announcing that Telstra had "enjoyed considerable success" in Hong Kong, but had to give over to what Thodey described as "a great opportunity to maximize shareholder value."
"CSL has been a strongly performing business, the compound annual revenue growth rate was 9.4 percent 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," Thodey said.
"However, there are a number of dynamics in the Hong Kong mobiles market that means this is the right opportunity for Telstra to maximize our return on this successful asset."
Telecommunications commentator Stephen Bartholemuez said that the about-face was anathema to Telstra's broader Asian dream.
"CSL was seen as providing Telstra with both leading-edge experience in operating next generation networks in an intensely competitive market. It also provided proximity, and perhaps a platform, if an opportunity to enter the giant mainland China market arose," he said.
Thodey, however insisted that Asia remained an important part of Telstra's strategy and the company intended to be in the region for the long term.
"It is a very diverse region, with each market in Asia having its own characteristics and opportunities, and we need to consider these individually as we look to maximize value for our shareholders.
"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."
Recently, Telstra increased its stake in Autohome Inc., the leading online destination for automobile consumers in China, and successfully listed it on the NYSE. Telstra's investment in Autohome is now valued at 1.9billion U.S.dollalrs.
In the last 18 months Telstra has opened nine new points of presence internationally, entered into two new submarine cable investments, opened a new data center in Singapore and boosted data capabilities across three continents.
"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," Thodey said.
The sale of CSL is expected to generate a profit on sale of about 600 million AU dollars. The net proceeds are incremental to Telstra's free cashflow guidance of 4.6 billion AU dollars to 5.1 billion AU dollars in fiscal year 2014.
Following completion, Telstra will address the net proceeds from the transaction consistent with its capital management framework.