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[IMG]https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcST6LLor9DYifC-3BvLh3Tr8QYNpL4w2LLNV1oIJowgw0bMFMZsGw[/Vodafone Hutchison Australia is understood to have pulled out of the running to buy Telecom New Zealand's Australian subsidiary, AAPT.

As first reported by The Australian Financial Review, AAPT was put up for sale last month with the first round of bids due for submission by the end of October.

Market watchers believed the three players with the most to gain from an AAPT acquisition were TPG Telecom, Nextgen and Vodafone Hutchison Australia.

AAPT is a telco that offers telecommunications and technology services to corporate customers. Its best assets are its fibre-optic cable networks, including 11,000 kilometres of interstate fibre and fibre access to 1600 premises.

Nextgen Networks was also an owner of intercity fibre-optic cabling. The Ontario Teachers' Pension Fund bought a 70 per cent stake of the Leighton Holdings subsidiary that valued the company at A$885 million (NZ$1 billion).

Documents provided to potential bidders forecast that AAPT would generate A$60m in earnings before interest, tax, depreciation, and amortisation (EBITDA) for its 2013 financial year. If AAPT is sold at the same EBITDA multiple as Nextgen, the deal could be worth over $400 million.

In late October, Vodafone expressed an interest in buying AAPT's intercity fibre links.

Vodafone recently sold out of its US venture Verizon in a deal worth US$130b (NZ$155b).

As part of its strategy Vodafone has created "Project Spring" - a plan to spend over A$10b from the Verizon sale to fix and improve the company's global operations over the next three years.

Global chief executive Vittorio Colao has also expressed a strong interest in buying fixed-line assets, giving Vodafone the money and will to make a move on AAPT.

But it is understood the company decided against the option after looking under the hood. One of AAPT's main problems is its sliding EBITDA caused in part by Telstra and SingTel-Optus cutting the prices of their services.

While rival telcos iiNet and M2 Telecommunications are also potential bidders, they cannot generate the required synergies to make a winning bid.

This means the two players set to be the last ones standing are the pension-backed Nextgen and TPG
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