Telstra axes A$5.5b fundraising plan

SYDNEY: Telstra Corp, Australia’s largest telecoms operator, dropped a plan to raise as much as A$5.5 billion (RM18.8 billion) through an income securitisation deal after a government-backed business partner rejected the move, sending its shares tumbling.

Telstra said two weeks ago it was considering doing a deal with investors by which it will get upfront a chunk of the A$1 billion per year that it receives from state-owned National Broadband Network (NBN), which rents ducts and other infrastructure from Telstra.

But yesterday Telstra said in a statement it was scrapping the plan as the government network refused consent.

“Without that, we can’t proceed,” Telstra spokesman Jon Court told Reuters, adding though, that it will continue to receive the income from the state network.

The scrapping of the fundraising plan comes at a delicate time for Telstra, which built Australia’s copper-wire phone network and is now seeking upfront cash to spend on growth businesses as its traditional revenue streams decline.

It was not immediately clear why the government network would need to approve Telstra’s securitisation plan, details of which are not known.

The state network, though, is usurping Telstra’s status as Australia’s monopoly telecoms wholesaler, and will replace Telstra’s copper lines with fibre-optic by about 2020.

Telstra warned earlier this month the network would hit its earnings by about A$3 billion a year from its scheduled completion in 2021. It said it would cut its dividend by 30% in fiscal 2018, partly because of the negative impact of the state network.