Mobile business too big for Telecom to digest, say analysts

WELLINGTON - Telecom might like to buy Cable & Wireless Optus' mobile phone business, but its huge size would cause considerable indigestion, analysts say.

The Australian telco rejected an Australian Financial Review report suggesting it planned to offer its $A15 billion ($19.5 billion) mobile phone business to Telecom or other companies as "complete rubbish."

"Our mobile business is highly profitable and a core part of our operations. It is not for sale," deputy chief executive officer Norman Gillespie said.

The company's 52.5 per cent owner, Cable & Wireless Plc, said it had not gone over the head of the Australian company to approach anyone about selling assets.

Analysts remain sceptical of the denials, saying C&W had stated it wanted to get out of the consumer businesses to focus on data products and its European businesses.

But they said C&W Optus' mobile businesses would be a colossal bite, given Telecom is only capitalised at $13 billion.

Telecom, as is its policy, declined to comment.

Telecom's share price closed 12c higher at 756c after dropping as low as 738c.

- NZPA