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Telstra takes $273m hit from US venture

Business

Telstra will take a $273 million hit in its first-half results after writing off the value of its US streaming business.

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The telecommunications provider today said it would write down the value of video tech firm Ooyala – which it took control of in 2014 – to zero and book an impairment charge of $273 million against goodwill and other non-current assets.

Telstra built its stake in Ooyala to 98 per cent between 2012 and 2016, but in 2016 was forced to writedown its investment by $246 million due to what it said at the time was changing market dynamics.

Telstra said today turnaround efforts since then had not been as successful as hoped.

“When we announced the initial impairment 18 months ago … we believed Ooyala remained a young and exciting company with leading offerings in intelligent video which were continuing to evolve and scale,” said Telstra executive Stephen Elop, who is also chairman of Ooyala.

“While some of these initiatives have been successful, the market has continued to change.”

Elop said Telstra was looking for Ooyala to exit ad tech – which had not performed well – but still saw a future for its video player and workflow management system despite them having yet to achieve scale.

At 1125 AEDT, Telstra shares were down 0.5 cents, or 0.14 per cent, at $3.635.

Telstra, which in 2017 reported a 32.7 per cent drop in full-year profit to $3.9 billion, is scheduled to report its first-half results on February 15.

– AAP

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