Telstra, Vodafone do a deal

Faced with a situation of ‘get big or get out’ Telstra has sold its New Zealand fixed and mobile subsidiary TelstraClear to Vodafone New Zealand for NZ$840 million ($665.8m).

It's not a huge deal, but as well as giving Vodafone the scale to compete with Telecom New Zealand, it offers a couple of points of interest.

One is it is an echo of Vodafone's acquisition of Cable & Wireless Worldwide. Vodafone NZ gets a fixed-line network that will help cut data costs, as well as access to TelstraClear's strong list of trans-Tasman corporate customers.

For Telstra, the transactions adds to its pile of cash. While it will return NZ$490 million to shareholders via a pre-completion dividend, that leaves another NZ$350m ($277m)in search of a deal.

It also underlines the thinness of Telstra's offshore business, which these days apart from POPs and submarine cable assets comprises just CSL in Hong Kong and a clutch of Chinese internet and mobile VAS providers.

Ovum research director David Kennedy says there's not much M&A available right now. "That money's going be burning a hole in its pocket," he says.