Invite colleagues
I bet if I asked the average Australian about Telstra spending 100's millions of dollars and owning a number of Chinese online publishers, many would be completely unaware if not completely surprised. Ask me about this strategy and I would say that on the surface this approach has merits and sound approach.... but like most things in China the strategy document with the impressive growth numbers and forecasts can often mask the 'greyness' of doing business in China and the inherent difficulties faced by a foreign (western) owner of a Chinese locally managed and operated business.
So when reading the news today about Telstra selling their position in Soufan via an IPO, I found myself wondering if this was done because they wanted to 'cut and run' or was it simply a case of taking a commercial perspective and making a good profit from an investee company?
Back in 2006, Telstra acquired a 51 per cent interest in SouFun, which operates a real estate and home improvement website for $US254 million ($283 million). The sale via an IPO return Telstra around $US413 million on the stake, or 62.6 per cent more than the acquisition price in 2006.. so in all a good return and a sound investment.
But would holding onto the position in Soufan longer return better results to the Telstra shareholders in the future? Or is this an acknowledgement of legacy issues bubbling within the Australian Telco's broader China strategy resinating from the Sol Trujillo era. Or is it just the China Telstra team getting the message through that running an online China business is dificult and frought with risk?
Do you have an opinion or view on this? Comment below...
Source: News Corp
Written on Friday, 13 August 2010 08:48 by Matt McDougall