Difficulties in Value Creation: Telecom New Zealand's Acquisition of Aapt Ltd.

Toth, Zoltan

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Toth, Zoltan

Abstract

I provide an overview of the Australian and New Zealand telecommunications markets through Telecom New Zealand’s (TCNZ) acquisition of AAPT Ltd in 2000 which amounted to more than NZ$2 billion. Few years later and after writing off approximately NZ$1 billion, TCNZ is considering a sell-off at a considerable

loss. I discuss the strategic reasons behind the acquisition and explain how smaller telcos are struggling to compete with the incumbent telecom in Australia. I further conduct an event study to assess the impact of the acquisition on both TCNZ’s and AAPT’s share prices and look at some of the post-acquisition issues. I finally provide a valuation analysis on the AAPT business.

Keywords

Telecom Corporation of New Zealand; AAPT Limited; Consolidation and merger of corporations; Telecommunication

Date

2006

Item Type

Dissertation

Supervisor(s)

Tourani-Rad, Alireza

Degree Name

Master of Business

Publisher

Auckland University of Technology