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James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

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David Teoh’s TPG to buy AAPT for $450 million

Published 09 December 2013 08:32, Updated 10 December 2013 09:36

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David Teoh’s TPG to buy AAPT for $450 million

The reclusive David Teoh earlier this year. Nic Walker

Reclusive Rich 200 billionaire David Teoh has unveiled his biggest deal yet, with his internet service provider TPG Telecom to buy AAPT’s wholesale division from Telecom New Zealand for $450 million.

In a deal announced early on Monday morning, Telecom NZ said the deal represented a multiple of 6.4 times AAPT’s annualised underlying earnings of $70 million.

There are no conditions to the deal, which is scheduled to be finalised by the end of 2014.

The sale comes as Telecom NZ seeks to pay down debt and focus its business on its home country.

‘The sale of AAPT is consistent with ... our desire to focus principally on our New Zealand operations and on the needs of New Zealand customers,” Telecom NZ chief Simon Moutter said in a statement to the NZ Stock Exchange.

TPG had long been considered the front runner to grab AAPT, which has long been something of a thorn in the side for Telecom NZ. Negotiations for the wholesale business started about two months ago.

Telecom NZ sold AAPT’s consumer division to iiNet for $60 million back in September 2010.

TPG has enjoyed a stellar run in recent years, as Teoh has aggressively built the company into the nation’s third biggest internet service provider behind Telstra and Optus.

Teoh and his wife Vicky are the controlling shareholders of the company; as the stock has leapt 70 per cent in the last 12 months, the value of their shareholding has climbed to $1.2 billion.

Teoh is no stranger to growth through acquisition.

The Malaysian-born businessman moved to Australia in 1986 and set up TPG as a computer hardware business, selling PCs, servers and printers, and later a range of network and internet services.

By 2005, TPG had been transformed into one of Australia’s fastest-growing internet service providers. Teoh listed his business three years later through a reverse takeover of SP Telemedia, emerging with $150 million and a majority stake in the business.

TPG has grown rapidly by hooking customers with cut-price internet services and acquiring businesses at a rapid rate. Its most prominent deal was the acquisition of Brisbane-based internet group PIPE Networks in 2010 for $373 million.

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