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Telstra Writes Down Value of Chinese Mobile Content Subsidiaries

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Australia's Telstra has announced that it is taking a AUD138 million write down on the value of its Chinese mobile content subsidiaries, the Octave businesses. Octave comprises ChinaM, a supplier of consumer mobile content, and Sharp Point, which provides technical services for China Mobile's central mobile music platform. Telstra acquired a 67% stake in the businesses in February 2009 for AUD259 million.

Telstra first highlighted a potential impact on the Octave business in August 2010 following regulatory rulings that were expected to constrain the Wireless Application Protocol (WAP) market in China.

The impact of the rulings has been clarified and consequently, Telstra has now updated the Octave business plan with the result it is expected to record an impairment charge against the carrying value of the Octave investments of approximately $138 million.

The Octave write-down will be recorded as an impairment in the results for the half-year ended December 2010. Neither the SouFun gain (from an IPO) nor the Octave impairment will affect guidance, which explicitly excluded asset impairments and proceeds from asset sales.

In China, Sequel, Telstra's China online verticals business, and LMobile, Telstra's China mobile content assets, continue to perform well.

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Tags: telstra  octave  wap  music  wireless  China