Communications giant Telstra is considering the sale of up to $1 billion worth of its land holdings as the company’s accommodation requirements start to shrink.
Chief financial officer Warwick Bray told investors on Thursday that the company had been reviewing “the value of assets on our balance sheet”.
“Most of our assets deliver a strategically valuable network, and as such their composite value is greater than the sum of the individual parts. However, we think our assets give us significant option value, and there may be opportunities to optimise,” Mr Bray said.
“For example with exchanges, land and buildings – accommodation requirements are reducing as electronics shrink, copper is transferred to NBN and we simplify our network architecture.”
He said this would enable an estimated 2500 exchange sites, or close to half of all Telstra’s exchanges, to be “rationalised”.
“Our initial view is that their market value less remediation costs would be more than their current written down book value of approximately $1 billion,” Mr Bray said.
Many of Telstra’s current 5300 exchanges are in prime locations in residential areas such as Vaucluse, Rose Bay and Mosman in Sydney, South Yarra and Toorak in Melbourne, Ascot Ashgrove and Brookfield in Brisbane.
Whether any of these such exchanges would be included in a sale is yet to be made public but it would attract significant interest from developers all over Australia.
Major groups such as Frasers, Mirvac, Lendlease and Stockland would all have balance sheet capacity to attempt a large scale purchase of Telstra’s property holdings.
Telstra’s current property holdings and accommodation requirements are managed by Australia’s largest property services manager JLL.
JLL declined to comment on whether any process had started.
Shares in Telstra closed down 1.8 per cent on Thursday to $3.50.
Telstra is also currently reviewing a major lease in Sydney at its 231 Elizabeth Street premises. Telstra has three five-year options in the building, which is owned by China’s Bright Ruby and is on the market for sale.
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