Telecommunications provider Pacnet is considering acquiring Australia’s third largest telecommunications firm AAPT. The company says it is also in talks with nine Australian telcos.
Pacnet, which is based in Hong Kong, is keen to take advantage of the downturn and expand its Asian footprint.
But the company fears the valuation of AAPT, the Australian division of Telecom New Zealand, has declined since December and that several other companies are overvalued as well.
According to Reuters, Pacnet offered $US420 million for AAPT in December 2008.
But chief executive Bill Barney has told reporters during a trip to India that valuations are changing fast in the current environment.
“That may have been a correct figure a while ago. Things are different now,” he said, while not revealing an exact figure that has been offered.
Barney claims there has been a recent trend to overvalue telecommunications companies, and claims acquisitions in the industry may slow as potential buyers become discouraged by higher prices.
“There is quite a bit of disconnect between where people think they are and where they are.”
That said, Pacnet is keen to forge ahead with deals during the downturn.
“We’ve got our cheque books open. There are four key markets we’re looking for acquisitions this year: Japan, China, India and Australia,” Barney said.
“We have $US100 million to $US200 million cash on our balance sheets, and we have the ability to raise $US400 million to $US1 billion cash fairly quickly,” he said.
The company says it is applying for licenses to offer national and long distance telephone services in countries such as India.
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
