Industry shake-up rumours persist

By PETER GRIFFIN

The Australasian telecoms industry could be in for a major shake-up if some of the speculation sweeping through the industry this week turns out to be true.

Rumours that dominant Australian telco Telstra has revived discussions to buy BT-owned Clear Communications persist, while across the Tasman analysts are fingering Telecom as a likely buyer should mobile operator Hutchison decide to offload its CDMA (code division multiple access) customer base of 123,000.

Clear spokesman Ralph Little would not confirm or deny whether negotiations between its parent company and Telstra had been rekindled, instead pointing to a memo that Clear's chief executive Peter Kaliaropoulos sent to staff on Wednesday.

"BT has not advised me about any further developments regarding the ownership of our business," he told employees.

A resolute "no comment" came from Telstra spokeswoman Karen Gomez. Telstra has set its sights on Clear before, but BT's selling price has been the sticking point.

In late August a consortium consisting of Jump Capital, Berkshire Partners and Todd Corporation was rumoured to be close to signing a deal for Clear, but was unwilling to meet BT's asking price of between $450 million and $500 million.

But a Clear-Telstra partnership would make sense.

Earlier this month Telstra moved to take up a $A150 million ($182.8 million) financing commitment from Austar, its partner in New Zealand operation TelstraSaturn. Telstra may also buy Austar's 50 per cent stake at the end of the 2004 financial year, making the purchase of Clear a sensible move to expand its network and challenge Telecom on its home turf.

A deal with Telstra would likely give Clear better bargaining power with Telecom over network access. The two companies have failed to agree terms of an interconnect agreement which expired on October 1.

BT's interest in hanging on to Clear would not have been strengthened by the demise of Concert, the joint venture between BT and AT&T. Clear and Telecom both provided network and data services to Concert customers.

And BT has undertaken a programme of divesting various interests in telcos across the Asia Pacific region in a bid to reduce debt of £30 billion ($103.7 billion), much of which was accumulated in buying expensive 3G spectrum in Europe.

Across the Tasman, the Australian Financial Review has reported that Hutchison Telecom was in final negotiations to sell its GSM (Global System for Mobile Communications) customer base of 279,000 to rival Optus, whose services it has been reselling under the Orange banner.

The paper also pointed to analyst speculation that Hutchison would wind down or offload its CDMA network - with Telecom considered a likely buyer.

Marie Kelly, director of public affairs at Hutchison, dismissed the speculation as unfounded.

"We are in discussions with Optus about the arrangements under the reseller contract with Optus," she confirmed, but said the company had no plans to sell its CDMA network. Optus spokesman Stephen Woodhill refused to comment.

Although uptake of customers on Hutchison's own network since its launch last July has been sluggish, its CDMA network is seen as a stepping-stone in the process of moving customers on to its 3G network, expected to be in place in Australia by early 2003.

But this month Australian analysts estimated that Hutchison's spending on the network may balloon from $A1 billion to as much as $A2.5 billion, possibly forcing the company to sell assets to meet its third-generation targets.