Clear keen to expand over Tasman despite sale threat

By RICHARD BRADDELL

Clear Communications is to pursue Australian expansion through acquisition of a niche player, even as Clear's continued ownership by British Telecom has come into renewed doubt.

Announcing a 47 per cent slump in second-quarter profit, BT said it would refocus on Western Europe and Japan, and would sell assets in an effort to cut £10 billion ($35.7 billion) in debt by the end of next year.

While BT's intention to dispose of minority stakes in high-value businesses such as BT Wireless came as no surprise, Clear's chief executive Peter Kaliaropoulos said that when he visited London two weeks ago, there had been no discussions with BT about Clear's future or any indication that it would be affected.

"It's not unknown for global companies to make comments about their global strategy and the details follow in the next few weeks," Mr Kaliaropoulos said.

Clear is currently enjoying something of a rebirth after languishing under conflicting shareholder objectives before BT bought out the three other shareholders in June 1999.

This year, BT committed more than $200 million to network development, after injecting $170 million to pay off Clear's debt after it was acquired.

Mr Kaliaropoulos said Clear, now refocused on business data and internet markets, was growing fast. Its strategy was future-proof, regardless of its owner, particularly since BT was not withdrawing capital expenditure money.

Evidence of Clear's continued focus was work now in hand on taking its brand to Australia, a strategy that was essential because its business customers wanted integrated service on both sides of the Tasman.

Australian expansion would be via acquisition and it would provide data and applications hosting among services.

"All I'm doing is making sure that I can grow the business on both sides of the Tasman and that's my priority right now.

"I also believe we will be more attractive to any potential new investor under that scenario."

BT's buyout last year is thought to have valued Clear at around $350 million.

But negotiations to sell Clear to Telstra at the end of last year are thought to have collapsed after Telstra's offer of $480 million fell well short of the $600 million BT demanded.

Telstra merged with Saturn, and Telstra Saturn stands out as having the strongest strategic interest.

But while BT has little obvious strategic reason to retain Clear, it may be well down the list of asset disposals since BT will be focused on getting the most money as soon as it can.

Clear lost $30 million in the previous financial year, but is now profitable after substantial restructuring.

While it is the smaller player in a market that will be increasingly fought out between Telecom and Telstra Saturn, it has a strong brand and modern infrastructure and is increasingly perceived as a strong player in the e-business and internet service provider markets.