Nov 12 (Reuters) - Australia's biggest telecom firm Telstra Corp TLS.AX has decided to split into three, it said on Thursday, citing heightened demand for infrastructure assets due to the disruptions caused by the coronavirus pandemic.
The health crisis has driven businesses and entertainment online, but pressured telcos to spend more to service surging demand. With fixed pricing structures, it has also left them with no quick way to monetize the investment. a result, Telstra froze job cuts in March and brought forward significant capital spending at a time when most other Australian firms were cutting costs. challenges and disruptions of the last 6-12 months have reinforced the increasing value of infrastructure assets globally," Telstra Chief Executive Officer Andrew Penn said.
"Our proposed new corporate structure reflects this new world."
The three new units will be infrastructure assets, mobile tower assets, and radio access network and spectrum assets, and the break-up is expected to be completed by December next year.
While Telstra dominates Australia's mobile and broadband markets, its mainstay fixed-line business has also been under pressure from the rollout of a state-owned National Broadband Network (NBN).
Telstra said it would seek investment from third parties for its towers from 2021.
"Separating its towers from fixed assets is a good move because the potential divestment of fibre assets will depend on NBN Co privatization, which may not happen until the next election", Jefferies analysts said in a note.
However, they said the potential valuation for tower assets will depend on how much control Telstra will have on access from third parties. ($1 = 1.3738 Australian dollars)