Telstra Purchases Majority Stakes In 2 China Firms
By Lyndal McFarland
The Wall Street Journal
Monday, June 30, 2008

SYDNEY --  Telstra Corp. said Friday it has taken majority stakes in two more online advertising groups in China, which it could spin off later in an initial public offering.

Extending its push into the world's most populous nation, Melbourne-based Telstra, Australia's largest telecommunications group, acquired controlling 55% stakes in auto and digital website operators Norstar Media and Autohome/PCPop for a total upfront payment of 76 million Australian dollars (US$73 million), with a further, smaller sum due by year's end if performance targets are met.

Telstra already has a presence in the fast-growing Chinese online advertising sector, having bought a 51% stake in the SouFun real estate Web site two years ago for US$254 million.

"Telstra now owns majority interests in three of the leading Chinese companies operating in the three key online advertising industry segments: real estate, auto and digital devices," Chief Executive Solomon Trujillo said in a statement.

Norstar operates the auto advertising site Che168.com and computer and IT equipment site IT168.com and Autostar operates Autostar.com.cn and PCPop.com.cn.  Telstra may look at an IPO for the newly acquired businesses in the next two to three years, Mr. Trujillo said.

"Much like what we've talked about with SouFun, at a future point we'd look at an IPO where we can further monetize and get recognition of the value that we've created," he said.

Telstra, which also owns wireless and undersea cable operations in Hong Kong, will continue to look at opportunities for further expansion in China and around the region, and wants to be a bigger player in the Chinese online sector, Mr. Trujillo said.

"China is a strategic location for us," he said.  "The Chinese market has become very interesting because it is so online-centric and people do acquire information almost daily around things that are important to them."

Write to Lyndal McFarland at lyndal.mcfarland@dowjones.com

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