Telecom management united on AAPT strategy, says CFO

By PETER GRIFFIN

Telecom's chief financial officer has described as "nonsense" reports of executive-level dissent over strategy and ongoing asset reviews that could see a large writedown of Australian subsidiary AAPT.

Marko Bogoievski said there was "a great deal of alignment" at management level and Telecom was confident about its strategy.

His attempts to dispel rumours of trouble at Telecom follow renewed speculation that Telecom's $2.4 billion investment in AAPT will face a large write-down by the end of the current financial period.

The Australian newspaper yesterday quoted unsourced analysts as saying the write-down could total as much as $1 billion.

Telecom had intangible assets on its books totalling just under $2 billion at the end of June last year - most of which related to goodwill associated with AAPT.

DF Mainland head of research Bruce McKay said a write-down would come as no surprise but that its impact may not be all that dramatic.

"It's a non-cash item so it doesn't have any impact on their operational performance and it wouldn't affect the company's ability to pay a dividend."

It would likely be in August when Telecom reports its full year results that the extent of any write-down in AAPT would become apparent.

While Telecom's chief executive Theresa Gattung has undoubtedly worn most of the blame for Telecom picking up AAPT at an over-inflated price, McKay said the seeds of the decision to jump the ditch were planted by her predecessor Rod Deane in a bouyant telecoms environment.

"At the time [of Telecom buying into AAPT] I remember the market being quite optimistic about prospects in Australia."

An analyst who did not want to be identified said the market would be watching to see whether Telecom would write up conservatively valued assets on its books to soften the blow, if a write-down of AAPT eventuated.

"Will [Telecom] try to write up other things they've got and will that be credible?"

"Either way the headline numbers are going to scream red. It will hurt."

Bogoievski and Telecom's spokeman Martin Freeth would not comment on further speculation that Telecom had lost out on a A$100 million contract with insurance company IAG to rival Optus. Telecom has never officially acknowledged it is bidding for the contract. Spokespeople for Optus and IAG refused to comment on the contract's progress.