A small blip on Telecom radar

By CHRIS BARTON

Strewth - a sheila running a telco. Where on earth did the Aussies get that idea from?

It may be coincidence, but Telstra's moves into New Zealand have a strange symmetry to Telecom's colonisation of Australia.

Both are looking to plunder the other's home turf - where each is the dominant player. Both have plucked a struggling competitor to fuel their expansionist endeavours. And both have put a woman in charge of the outpost - Karyn Devonshire at Telecom Australia and Rosemary Howard at the integrated New Zealand entity comprising TelstraSaturn and Clear.

But there are also big differences - the most notable that Telstra, like Australia, is so darned big.

Telecom's revenue this year was an impressive $5.65 billion with a reasonably healthy $643 million profit. But that's dingo fodder for Telstra, which weighed in with revenue of $A18.9 billion, and a record net profit of $A4.1 billion.

But even with the Clear acquisition, the local Telstra entity adds to projected revenue just $567 million and a yet-to-be-determined loss. That's mainly because TelstraSaturn's cable TV and telecommunications business is bleeding red ink. Clear has struggled, too - though it shows signs of delivering a small profit of about $30 million this year.

On paper the combined force gives Telstra just 11 per cent market share - a small blip on Telecom's radar.

Telecom will probably get a breathing space of about a year before a lean and mean Telstra will start to provide serious competition in the business market.

Competition in the residential market will take much longer.

How long depends on two decisions. The first is whether Telstra will continue its $1.1 billion cable rollout beyond parts of Wellington and Christchurch. It is plagued with difficulties, but provides the only viable alternative pathway to Telecom's monopoly on residential phone lines.

The second lies with the Government and what it decides to implement in the long-awaited Telecommunications Bill regarding the wholesaling of Telecom's services.

At this stage, both decisions look likely to leave residential consumers where they've always been - with little real choice.