(adds Telecom shares in trading halt)

Wellington, July 30 NZPA - Trading in Telecom shares is halted pending the outcome of discussions on the disposal of assets.

Earlier The Australian newspaper reported that Telecom is set to sell the struggling consumer arm of its Australian business AAPT to Perth-based internet service provider iiNet for up to $A60 ($NZ74.6m) million.

Speculation about the future of AAPT is at fever pitch with Telecom yesterday saying only it was considering options for the Australian business.

Telecom said it had previously advised that it would consider offers for its AAPT business that were in the best interests of shareholders.

"Telecom is currently considering strategic options in respect of these assets," the company said.

Today a Telecom spokeswoman would not comment on the latest story in The Australian, describing the report as "purely speculative".

Yesterday, a trading halt was put in place on iiNet shares in Australia pending an announcement about a transaction.

"The company requests a two day trading halt, and envisions making an announcement to the ASX concerning the proposed transaction prior to the market opening on Monday, August 2 which will lift the trading halt," iiNet said in a statement to ASX.

In its story, The Australian said the AAPT deal would also see Telecom quit the share register of iiNet and offload its 17.4 percent stake through a structured sell-down to institutional investors.

Telecom would retain the wholesale fibre division of AAPT for a possible sell-off into the Australian national broadband network at a later date. But until then iiNet's new broadband customers, courtesy of AAPT's consumer arm, would continue to be served by Telecom's fibre holdings.

Telecom had been hoping to sell AAPT in a $A300m-plus deal, but decided to split the business after bidders fell well short of the mark, The Australian reported.

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