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Telstra Takes Keycorp Stake, Forms Internet Payments Business

[Sydney, AUSTRALIA] Telstra has agreed to buy 51 percent of Keycorp Limited as part of a plan to build a global end-to-end Internet payments service provision business. Telstra said the two companies would be able to offer integrated payment for financial institutions and their merchant customers.

Telstra will subscribe for 38.7 million shares for AUS $515 million (US $321 million) at AUS $13.30 (U S$7.98) per share. Telstra's EFTPOS payments carriage, installation and maintenance business will be merged with Keycorp. Telstra said Keycorp will operate as an independent company and continue to serve its customers.

For financial institutions, Telstra claims the combined businesses will offer the ability to deliver value added services at more affordable prices for merchants using basic electronic payment systems, such as Web-based payment, loyalty and customer relationship management, application service provision, Internet service provision, Web hosting, B2B and other e-commerce solutions. The service will also be pitched at smaller merchants which don't use electronic methods, offering "packaged services over a single communications line."

Keycorp currently provides transaction products including Point-of-Sale (POS) devices, smartcards and e-commerce payment gateways. Telstra will provide network carriage of EFTPOS transactions and POS installation and maintenance.

The investment by Telstra in Keycorp is conditional upon the satisfaction of legal, regulatory and commercial requirements including approval from the ACCC.