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Telecom scotches report of AAPT offer

Tuesday 2nd December 2008

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Telecom, New Zealand's biggest phone company, scotched reports it has been approached by Pacnet with an offer of US$420 million for its AAPT unit in Australia.

Pacnet, formed from the merger this year of Asia Netcom and Pacific Internet planned to finance the offer with cash and equity, Reuters reported, citing a person close to the situation.

The report is "purely speculative" and Telecom remains committed to AAPT, spokesman Mark Watts told BusinessWire.

AAPT has battled Telstra, Australia's biggest telco, and Optus, the local unit of Singapore Telecommunications, for market share. Telecom has slashed the value of the business by more than $2 billion to $270 million sionce acquiring AAPT in 1999.

Reuters said Pacnet was interested in AAPT to complete its Asia-wide reach prior to a potential IPO next year.

Telecom has predicted little profit growth in the next few years because of increased investment in infrastructure, intense rivalry with competitors such as Vodafone Group. Costs have risen after the government ordered Telecom to separate its wholesale and retail divisions to foster more competition.

By Jonathan Underhill

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