In a statement issued this afternoon, Telstra chief executive Sol Trujillo said the Chinese acquisition provided growth opportunities for the company's directories and online business Sensis, which will manage SouFun.
"SouFun provides an attractive entry point into China, one of the world's fastest growing economies, allowing Sensis to leverage core capabilities into a larger, faster growing and less mature market than Australia, with high performing, internationally experienced local management," Trujillo said.
Telstra also announced it had sold Australian Administration Services, the superannuation administration business of its subsidiary KAZ Group.
The sale to Link Market Services for AU$215 million realised a profit of approximately AU$56 million. The sale follows a review that determined the superannuation administration services was no longer strategic to Telstra's business going forward.
Telstra took pains to quash persistent rumours KAZ itself was on the market, saying the ICT services group remained "an important part" of Telstra's strategy.
SouFun founder and chief executive Vincent Mo will remain a significant shareholder while the balance of the shares will be held by management and IDG, a venture capital firm.
Telstra chief financial officer John Stanhope said SouFun was a high growth company and an extremely strong business. "SouFun is cash flow positive from day one," he added.
It is expected to contribute net revenue of AU$52 million and earnings before interest, tax, depreciation and amortisation of AU$18 million in fiscal year 2007.
Soufun will also be earnings per share accretive from year three.
Sensis chief executive Bruce Akhurst said Sensis' growth strategy was to expand into new geographic markets through partnerships or acquisitions.
"By expanding our business globally we are able to take our extensive experience offshore and become a leading Australian exporter of IP, while consolidating world best practices and applying them to our existing business operations to stimulate growth," he said.
SouFun provides information, advertising and listing services to China's growing online real estate and home furnishing and improvement sectors.
Its primary revenue is generated by online display advertising on the SouFun.com website.
SouFun will continue to be lead by Mo and its local management team, Telstra said. "Sensis will add senior representatives with key expertise to Vincent's team," Telstra said.
"In the immediate future, Sensis and SouFun will continue to work closely to leverage mutually exclusive business benefits."
AAP 31 August 2006
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