What many feared, some justly, some weirdly out of sorts is now happening. Let us be fair, whatever is in the yellow pages, many will know and have and as such there is no ‘US monitoring’ going on. So what is going on? The fact that the story as leaked went from a possible sale of 3 billion, to slightly less and to now 450 million is quite a leap (at http://www.smh.com.au/business/telstra-faces-scrutiny-over-sale-of-sensis-20140112-30ooj.html ). The latest message in the Sydney Morning Herald shows an interesting graph. Even though incomplete (as in costs that are connected), the fact that that something is now getting sold at roughly 30% of the annual earnings is also unsettling. In my personal view, someone is getting pretty rich on this deal!
So, is this about the US? No, good business is good business. If they find the sucker punch solution where they buy something at 30% of revenue and they can hold onto it for 18 months, then the investor would have made a killing. It would be very good business. The question becomes whether we should question the sanity of Telstra. That question remains a question as the costs for Sensis remains unknown, but the fact that someone in the US is willing to dash out half a billion means that the numbers were done and to some it all adds up.
When we see the quote “David Thodey, has shown he wants to offload legacy businesses that face further declines in revenue, and reposition the Telco for the digital world.” we need to wonder what possesses a CEO to ‘reposition‘ the company at minus 1.35 billion dollars revenue a year. Yes, there might be issues at what the value of Sensis is worth in 2 years and that would be a valid question. The issue is that offloading business solutions that have proven themselves for a long time (the Yellow pages) means that the business atmosphere is changing.
So, do we see this as a Telstra stupidity? Not sure, it could be visionary, yet that is only known when the path comes to fruition. The issue that business spectator mentioned that Sensis could be sold for 3 billion before the weekend (at http://www.businessspectator.com.au/news/2014/1/11/telecommunications/telstra-may-sell-sensis-3bn) and one day later it goes for slightly less according to Reuters. The fact that the weekend diminished the sales price by well over 80% gives thought that someone’s breads is getting buttered (a lot). The last part give thought when we see the Reuters article quote “Goldman Sachs is advising Telstra and Gresham is advising the U.S. firm, the newspaper said.”
The fact that some of the Gresham people were formerly big wigs at Goldman Sachs makes me wonder even further. Is this just a business venture or is this the start of a few solid golden handshakes (and I mean solid 24K golden handshakes).
The last part of info worries me and I know that I have no right to be worried. It is also true that Goldman Sachs is not into the act of breaking the law (perhaps bending it to the legal maximum yes, which is not a crime).
If this is a valid business deal, then I have no right to be worried (it is not like I work there). The evidence is however a worrying one. Why cut a 1.4 billion revenue business in these harsh economic times? David Thodey might be the visionary Telstra needed or he might not, time will tell!
Lawrence van Rijn - Law Lord to be 