The Border Watch : January 14th 2014
BUSINESS Telstra offloads Sensis for $450m SYDNEY: Telstra has sold off its shrinking directories business Sensis as it builds up a multi-billion dollar stockpile of cash to fund investment and, possibly, higher returns for shareholders. The telco has agreed to sell a 70 per cent stake in Sensis, which includes the white and yellow pages business, to US-based private equity business Platinum Equity for $454 million. Telstra will retain a 30 per cent stake in the business and would retain its voice services business, which was previously included as part of Sensis. The deal values Sensis at $649 million. It is a far cry from the reported $10-12 billion valuation placed on Sensis when Telstra considered selling it in 2005 and 2006. Chief executive David Thodey said now was the right time to sell Sensis and refused to dwell on the lost opportunity to cash in a decade ago. “After the GFC, life changed and we can’t go back before that period,” he said. IG market strategist Evan Lucas said even at the lower valuation, the sale was still in Telstra’s best interests given the ongoing decline in revenues, especially from the print arm of the business. “It has just been hemorrhaging money and there’s no reason to hold on to it any longer,” he said. Telstra will make an accounting loss of about $150 million on the deal, but the $450 million pay cheque will add to a growing stockpile of cash available for the telco to invest or return to investors through a special dividend or share buybacks. Rise points to housing strength Rate cuts unlikely as market strengthens by 1.1 per cent SYDNEY: Rising home loan approvals are another sign that the housing recovery is in full swing, meaning another cash rate cut is unlikely. The number of home loans approved in November was up 1.1 per cent to 52,912, the Australian Bureau of Statistics said yesterday. That meant the end of the road for rate cuts during this cycle, Commonwealth Bank of Australia chief economist Michael Blythe said. “We think (the Reserve Bank of Australia is) done because those interest rate sensitive parts like housing, as we’ve seen today, are moving,” he said. “You don’t need any more help from that perspective and the sectors that do still need help would benefit more from a lower currency.” Mr Blythe said the cash rate was likely to rise, from its record low of 2.5 per cent, in late this year as a weakening Australian dollar added to inflationary pressures. National Australia Bank senior economist Spiros Papadopoulos said home loan approvals had risen almost every month in 2013, except August. But although the housing AAP market was strengthening, it would not be enough to rebalance the economy as the mining investment boom winds down, he said. He said unemployment would continue to rise, meaning the RBA would be unlikely to raise the cash rate this year. “This is another indicator that points to the strength in the housing market, alongside rising house IN BRIEF Asciano-Whitehaven sign 12-year rail deal BRISBANE: Freight rail operator Asciano has entered into a 12-year haulage agreement with Whitehaven Coal that will reduce costs. The company’s Pacific National Coal division’s agreement with Whitehaven comes into effect this month and expires in June 2026. Per tonnage haulage costs are lower under the new agreement through the use of fewer train services for any given volume, Asciano said yesterday. Sydney roads boost Transurban revenue MELBOURNE: Strong traffic growth on Transurban’s Sydney roads has helped boost the tollway operator’s half-year revenue. Transurban yesterday said the group’s toll revenue rose by 13.3 per cent to $450.6 million for the six months ending December 31, compared to the prior corresponding period. Statutory toll revenue for the December quarter lifted 12.6 per cent to $228.1 million. Volkswagen SUV to hit US in 2016 Back on the market: ABS says home loan approvals rose in November. Housing finance: where the money goes Total number of home loans approved in November rose 1.1 per cent of which (seasonally adjusted): Construction of dwellings rose 2.3 per cent Purchase of new dwellings fell 4.3 per cent Purchase of established dwellings rose 1.4 per cent AAP prices and the upward trend in building approvals that we’ve seen in recent times,” Mr Papadopoulos said. “We think there’s still going to be a hole left in the investment outlook and although the housing and construction part of the equation will be supporting Canadian Saputo lifts cheese stake MELBOURNE: Canadian dairy giant Saputo now holds more than 26 per cent of takeover target Warrnambool Cheese and Butter, up from just over 21 per cent. On Friday, Saputo extended its offer for Warrnambool by 12 days, to 5pm on January 22. It also said its stake in WCB had increased to 21.392 per cent. Yesterday, it said that stake had now risen to 26.445 per cent. Saputo is offering an unconditional $9 a Warrnambool share, but that price could increase to as much as $9.60 if Saputo attains various share thresholds in WCB at and above 50 per cent. Saputo’s offer is final. Saputo is vying with Australian dairy co-operative Murray Goulburn for control of Warrnambool. Wanted: Warrnambool Cheese and Butter products. Picture: AAP Murray Goulburn’s bid of $9.50 is conditional upon it obtaining more than 50 per cent of Warrnambool shares. Murray Goulburn has a 17.7 per cent stake in Warrnambool. 10 - The Border Watch, Tuesday, January 14, 2014 growth, the other nonmining sectors will still be quite soft and not strong enough to offset the mining slowdown. “We don’t think it’s going to be enough overall, which is why we think the unemployment rate is going to head higher and why the Picture: AAP RBA won’t be in a position to raise rates this year.” Housing Industry Association senior economist Shane Garrett said recovery in the housing construction sector would help rebalance the economy by creating more jobs. “There are few sectors of the economy more labourintensive than dwelling construction,” Mr Garrett said. “The strong expansion of the sector brings the potential for greater jobs market support at this time of economic transition.” AAP Aussie share market trades slightly lower MELBOURNE: The Australian share market is trading slightly lower after disappointing US jobs figure. Lonsec senior client adviser Michael Hefferan said the most recent US employment figures may have fallen short of expectations but had followed two months of very strong growth. “The US economy, in my view, is still on track to do well, but there’s been a few knee-jerk reactions in a negative direction,” Mr Heffernan said. Mr Heffernan said the local bourse was only slightly lower. “It’s really neither here nor there in my book,” he said. In the United States on Friday, AAP markets closed mixed after the monthly Labor Department report said the US economy added 74,000 jobs in December – well below the 197,000 expected by analysts. At the close of the Australian market yesterday, Telstra was down 1c, or 0.19 per cent, at $5.25 after announcing it would sell a 70 per cent stake in Sensis. Leighton Holdings was down 18c, or 1.1 per cent, at $16.20 after subsidiary Thiess won a $135 million contract from Western Desert Resources to lead the mining operations at the Roper Bar iron ore mine in the Northern Territory. Meanwhile, freight rail operator Asciano was up 2c, or 0.36 per cent, at $5.64, with Whitehaven Coal down 8.5c, or 4.6 per cent, at $1.77, after the two entered into a 12-year haulage agreement that will reduce costs. DETROIT: Volkswagen’s new seven-passenger SUV will go on sale in the US in 2016. The German carmaker’s CEO, Martin Winterkorn, confirmed the timing of the new vehicle on the eve of the Detroit auto show. Plants in Chattanooga, Tennessee, and Puebla, Mexico, are vying to build the SUV. Winterkorn said the new SUV will be part of a five-year, $7.80 billion investment in North America. Job advertisements fall in December BRISBANE: The number of job ads fell in December for the third straight month, but the pace of deterioration in the labour market is moderating. Internet and newspaper advertisements at the end of last year fell by 0.7 per cent to 124,786, compared with 125,657 in November. In the year to December, the number of advertised positions dropped 9.1 per cent but the annual pace of decline was the least severe since August 2012. SeaLink boosts Harbour fleet AAP MELBOURNE: Ferry operator SeaLink Travel Group, which owns Captain Cook Cruises, has acquired another vessel to boost its operations in Sydney Harbour. The 24m Freedom Sovereign, which is being modified to lift its passenger capacity to 250, cost $3.06 million.
January 10th 2014
January 15th 2014