Formal search to replace Gattung expected within weeks

By NZPA

Monday 15th January 2007

Telecom is expected to start a formal search for a replacement for chief executive Theresa Gattung within weeks, The Sydney Morning Herald reported today.

In October, Gattung celebrated her seventh year at the helm of New Zealand's biggest listed company, but institutional investors were now expecting a change.

Gattung was expected to pay the price for last year's change to the regulatory environment which cost Telecom shareholders dearly.

Telecom's chief financial officer Marko Bogoievski had been touted as a replacement, as had Telstra's managing director for enterprise and government David Thodey.

Telecom spokesman, John Goulter, said "as of now no formal search has been launched" for a replacement. He declined to comment further.

Meanwhile, The Australian reported today that Australia's major media groups were "lining up" for the impending action of Telecom's Yellow Pages business, worth up to an estimated $2.2 billion.

Kerry Stokes's Seven Media and its private equity partner, US-based Kohlberg Kravis Roberts, were keen to add the directories group to their portfolio.

Fairfax Media, which spent $700 million for online auction business Trademe last year, was also understood to be interested in Telecom's Yellow Pages business.

"If someone ends up paying a high-end multiple, this has very significant implications to Telecom New Zealand," Macquarie Bank analyst Andrew Lay said in a recent note.

"We estimate that if the final price is $NZ2.2 billion, TNZ can spend $NZ1.6 billion buying back its own stock."

Telstra was also interested in the New Zealand business in which it has had a stake since the Internet boom in the late 1990s.

Telstra could easily lock it into its Australian directories business, Sensis, but observers believed Telstra was unlikely to be successful.

Macquarie Bank had also entered the market, buying pan-European group Yellow Brick Road two years ago, and may also consider a bid, using any number of potential vehicles.

A number of other global private equity fir were also understood to be considering bidding for the business.

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