Telstra sells Hong Kong business for $US2.4 billion

The decision will net Telstra $600 million profit and increase free cash flow to $5.1 billion this financial year.

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Today Telstra (ASX: TLS) announced its intention to sell its Hong Kong mobile business CSL to Hong Kong Telecommunications for US$2.425 billion.

The decision to sell its rapidly growing business may come as a surprise to many shareholders however CEO David Thodey said, "Telstra had enjoyed considerable success in Hong Kong however this was a great opportunity to maximise shareholder value."

"CSL has been a strongly performing business, the compound annual revenue growth rate was 9.4 per cent over the last three years and we have gained market share. We are proud of CSL's achievements. It has established itself as a premium brand and strong player in the market, last year adding 425,000 mobile customers," Mr Thodey said.

CSL is part of Telstra's international business, which has formed part of its major growth prospects moving forward. It includes assets such as the group's recently listed Autohome (NYSE: ATHM) business, which is now valued at $US1.9 billion. The proceeds from CSL will net the telco around $600 million and increase free cash flow to $5.1 billion from $4.6 billion.

Collectively, last year the international businesses grew revenue to $1.739 billion and Mr Thodey says the group is still focused on Asian growth and will seek strategic opportunities by leveraging from its established operations. "We want to leverage domestic strengths to grow our global footprint… In the last 18 months Telstra has opened nine new points of presence internationally, entered into two new submarine cable investments, opened a new data centre in Singapore and boosted our data capabilities across three continents."

"We have seen significant growth in different parts of our business in Asia, including Autohome and Telstra Global." Mr Thodey said.

Foolish takeaway

Telstra's decision may have caught some shareholders by surprise given the company's recent success in Hong Kong, however management still have numerous growth opportunities to pursue in other Asian states.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

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