Telstra Corp., Australia’s largest telephone company, remains committed to investing in China after moving to sell its shareholding in property website SouFun Holdings Ltd., Chief Executive Officer David Thodey said.
Selling the equity stake “doesn’t mean, as people have speculated, that we’re not committed to China,” Thodey said in an interview with Bloomberg Television. SouFun, 50.5 percent owned by Telstra, last week filed for an initial public offering with the U.S. Securities and Exchange Commission, valuing the unit at as much as $850 million.
Telstra, based in Melbourne, acquired its stake in SouFun, China’s most-popular property website, in 2006 for $254 million under the tenure of Thodey’s predecessor, Sol Trujillo. China is a “wonderful market” for the company, and the IPO represents a natural end to the SouFun investment, Thodey said.
In Australia, as the Labor party and Liberal National coalition compete after an inconclusive election on Aug. 21, Telstra is “willing to work with any government of the day,” Thodey said.
Plans for a national broadband Internet network are a key distinction between the parties, with Julia Gillard’s Labor pledging a government-owned, A$43 billion ($39 billion) national broadband network and A$11 billion in compensation paid to Telstra for shutting down its own copper-wire network.
The Liberal National coalition, led by Tony Abbott, plans to spend A$6.3 billion laying new fiber and building wireless networks in cities and regional areas that existing operators could use. Telstra would miss out on the compensation package while keeping its fixed-line network, which has the company’s widest profit margins.
Profit Forecast
Neither the incumbent Labor government nor Abbott’s opposition coalition won a majority in the Aug. 21 poll, and support from three independent lawmakers is likely to decide who becomes the nation’s prime minister. The three independents, Tony Windsor, Robert Oakeshott and Bob Katter have yet to say who they will support.
Telstra reduced its 2011 profit forecast last month, sending the shares to their biggest decline since December 2008.
Thodey trimmed the company’s earnings forecast because he plans to cut mobile-voice and Internet prices to protect market share as more households abandon traditional fixed-line service.
Telstra climbed 1.4 percent to A$2.86 in Sydney trading yesterday. The shares have declined 17 percent this year.
