Seven Group Limited Reaches Four-Month High on Wireless Sale

Seven Group Limited Reaches Four-Month High on Wireless Sale

On Monday, Seven Group Holdings announced plans to sell its Internet unit vividwireless to the Singapore-based company Optus for ($248 million).

The sale will bring a number of opportunities for Optus, which is a unit of Singapore Telecommunications Ltd. It will receive two businesses and their customer bases from vividwireless and Unwired. Optus will also attain spectrum licenses, which combined with its current network will provide greater mobile data speeds and capacity.

The company will also gain a 4G network that encompasses the metropolitan areas of Perth, Sydney, Melbourne, Brisbane, Adelaide and Canberra for both consumers and businesses. In April, the company will introduce the 4G network in the Newcastle and Hunter region of New South Wales.

Seven Group Holdings chief executive Peter Gammell said in a statement about the transaction, “This sale recognizes value for the investment we’ve made in vividwireless.”

In 2007, Seven Group purchased Unwired Group for A$114 million.

Seven Group still retains investments in 32 percent of Seven West Media Ltd, the owner of Australia’s highest-viewed TV broadcaster, a 24 percent shareholder in Consolidated Media Holdings Ltd. and the Caterpillar Inc. dealer, Westpac.

The transaction will be subject to approval from the Australian Competition and Consumer Commission and the Foreign Investment Review Board .This is expected to take 6 months. Optus will also have to pay the Australian Communications and Media Authority an amount no greater than A$50 million to have the spectrum licenses reissued. The total A$280 million transaction will be paid by Optus from internal and debt funding.

One analyst viewed it as a positive for the shareholders of Seven Group. In an interview with Deal Journal Australia, J.P. Morgan analyst Anthony Passe-de Silva said the transaction, “releases cash Seven can reinvest in other divisions such as WesTrac and reduces capex in an area where they didn’t have much scale.”

He also noted that the market had not placed a value on vividwireless in the past and because of this, the strength of Seven’s stock price mirrored this.

Investors reacted positively to the news. Seven Group’s stock reached a fourth-month high, rising 5.7 percent to A$8.56 at the market’s close. This is the stock’s highest price last seen on Oct. 11.

Singapore Telecommunications also responded well. Its stock increased 0.4 percent to A$2.27/share.

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Tags Telecommunicationsoptussingtelmergers & acquisitionsASX:SVWSeven Group

More about Australian Competition and Consumer CommissionCaterpillar of AustraliaForeign Investment Review BoardInc.MorganOptusSingapore TelecommunicationsUnwired AustraliaWestWestpacWestpac

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