VITA GROUP SHARES SMASHED BY TELSTRA TAKE-BACK RUMOURS

Written on the 5 April 2017 by Ben Hall

VITA GROUP SHARES SMASHED BY TELSTRA TAKE-BACK RUMOURS

TELSTRA has denied it wants to take control of some of its high performing stores from its long-term retail partner Vita Group (ASX: VTG), after rumours of the plan sent VTG shares into a 21 per cent freefall.

Fairfax Media, citing a leaked internal Telstra memo, reported Australia's biggest telco wanted to take back 11 stores operated by Vita Group.

The document allegedly contained information that Telstra could operate these stores more profitably, given it would not have to pay commissions to licensees.

Brisbane-based Vita Group operates 102 Telstra stores and its share price fell 68 cents to $2.54 on Tuesday as a result of the information leak.

A Telstra spokesman said the document quoted by Fairfax was "for discussion purposes only" and its arrangement with Vita Group runs until 2020.

"It does not reflect the viability of any of the stores listed, and no decisions can be taken on individual Vita sites due to the nature of the agreement," he said.

"There are no current plans to amend our arrangement with Vita Group," a Telstra spokesman said.

Vita Group issued a statement to the ASX re-iterating its agreement with Telstra is binding until 2020.

"Telstra and Vita Group have enjoyed a strategic relationship for 22 years, presently governed by a master license agreement, which applies to all of Vita Group's Telstra stores," the statement says.

"The master licence agreement has been extended a number of times and currently extends to 2020.

"The terms of the master licence agreement are confidential and any significant changes to it are subject to mutual agreement."

At around 1pm AEST, VTG shares had rallied 13 per cent to $2.87.

Business News Australia

 
Author: Ben Hall

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