SYDNEY/BENGALURU, Nov 12 (Reuters) - Australia's biggest
telecom firm Telstra Corp said on Thursday it will
split into three units and divest its mobile towers from next
year citing heightened demand for assets, sending its shares up
more than 8%.
Telstra, which due to the COVID-19 pandemic had to suspend
cost-cutting, hand out free data, and halt the charging of
overdue fees to customers, has also struggled to compete with
new technology with its ageing fixed-line infrastructure.
"The challenges and disruptions of the last 6-12 months have
reinforced the increasing value of infrastructure assets
globally," Telstra Chief Executive Officer Andrew Penn said.
"Our proposed new corporate structure reflects this new
world."
The three new units will be infrastructure assets, mobile
tower assets, and radio access network and spectrum assets, the
company said. The break-up was expected to be completed by
December next year.
From 2021, Telstra said it would seek to "monetise" the
mobile towers "given the strong demand and compelling valuations
for this type of high-quality infrastructure."
Goldman Sachs values the towers at about A$4.5 billion ($3.3
billion).
While Telstra dominates Australia's mobile and broadband
markets, its mainstay fixed-line business has been under
pressure from the rollout of a state-owned National Broadband
Network (NBN).
The pandemic has driven businesses and entertainment online,
but pressured telcos to spend more to service surging demand.
With fixed pricing structures, it has also left them with no
quick way to monetise the investment.
As a result, Telstra froze job cuts in March and brought
forward capital spending at a time when most other Australian
firms were cutting costs.
"Separating its towers from fixed assets is a good move
because the potential divestment of fibre assets will depend on
NBN Co privatisation, which may not happen until the next
election," Jefferies analysts said in a note.
However, they said the potential valuation for tower assets
would depend on how much control Telstra would have on access
from third parties.
The Melbourne-based company's shares were 7% higher at
A$3.19 in afternoon trade, their highest price since mid-August.
($1 = 1.3729 Australian dollars)
(Reporting by Paulina Duran in Sydney and Shruti Sonal in
Bengaluru; Editing by Arun Koyyur and Stephen Coates)