Telecommunications provider, Telstra, is set to make $454 million from a new strategic partnership with Platinum Equity as it prepares to sell 70 per cent of its stake in its directories business, Sensis, to the US-based private equity firm.
The sale excludes Sensis' voice services business, and includes economic benefits to Telstra from services it will continue to provide to Sensis. The 30 per cent retained by Telstra combined with the voice services business is valued at $649m.
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According to a statement, the transaction price is equal to a multiple of 2.4 times Sensis' 2014 financial year forecast earnings before interest, taxes, depreciation and amortisation (EBITDA) after following adjustments for the voice directories business and standalone costs of operating the business.
The telco said sale proceeds of $454m are incremental to its 2014 financial year cashflow guidance of $4.6 billion to $5.1bn. It expects to record an accounting loss on Sensis of about $150m, subject to completion timing and adjustments. Approximately $100m is expected to be included in the December 2013 half-year results, with the balance accounted for on completion, which is expected in the second half of the 2014 financial year.
Post completion Telstra will records its 30 per cent future share of Sensis net profit after tax in its EBITDA. The value of the telco's retained shareholding incorporates the impact of debt financing for the acquisition.
Under the conditions of Telstra's Carrier License, Sensis will continue producing and distributing White Pages Directory. Under the same obligations, Telstra itself will continue to provide directory assistance (1223) services. Voice services including the 1234 and 12456 services are a part of Telstra's core telecom offering and will continue to be operated by the telco as an ongoing supplier to Sensis.
Telstra chief executive officer (CEO), David Thodey, claims the agreement will allow Sensis to generate further momentum following the last two years which have seen the telco enhancing its print directories business with a set of digital directory offerings.
He also said the sale will maximise the value of the Sensis asset for Telstra shareholders.
"Sensis has been an important business for Telstra shareholders and the cash flow generated by Sensis over time has contributed significantly to our ability to invest in the growth of our core telecom businesses."
Platinum Equity will operate Sensis as a separate entity moving forward once the transaction is complete.