Telstra, PCCW to restructure Reach

Dylan Bushell-Embling
27 Jan 2011
Daily News

Australia's Telstra and Hong Kong's PCCW have announced plans to restructure their subsea cable joint venture, Reach.

Telstra has revealed it expects an accounting gain of up to A$150 million ($149.7 million) as a result of the restructure, which involves splitting the majority of the JV's international assets between the operators.

Reach will continue to manage the domestic Hong Kong assets and some others. Telstra and PCCW expect the restructure to be finished in 1H11.

Telstra said the restructure will give its global arm, Telstra International, a greater degree of control of the platform used to deliver end-to-end services over Reach-invested networks.

Reach provides international voice and satellite services in Asia and elsewhere, and has interests in the subsea cables Japan-US, the APCN2, Southern Cross Cable, AJC, SEA-ME-WE 3, China-US and the Apollo Cable System.

But the business has not been a profitable one for Telstra, with its share of carried forward losses in Reach reaching $596 million as of June 30 last year.

The operator was also forced in 2010 to write down A$170 million on its investment in its other major business in Hong Kong, joint venture CSL New World, which Telstra originally bought into in 2001 as part of its partnership with PCCW.

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