Southern Cross cable up for grabs, says Telecom

Telecom rejects claims that Singapore Telecommunications' takeover of Cable & Wireless Optus will not trigger an ownership shake-up of the $2.8 billion Southern Cross Cable Network.

Telecom believes SingTel's purchase of Optus has triggered a pre-emptive option allowing the network's other owners, Telecom (50 per cent) and MCI Worldcom (10 per cent), to buy Optus's 40 per cent holding in the lucrative submarine-cable company on a pro-rata basis.

Telecom spokesman Martin Freeth said: "There are pre-emptive rights and we are surprised about the [SingTel] comments that they don't apply in these circumstances."

SingTel confirmed last week that the pre-emptive-rights provision existed but claimed the Optus deal would not trigger it.

Telecom, which unsuccessfully bid for Optus's mobile network, said it would not make a decision on the issue until it saw how the sale panned out.

It may be watching to see whether the SingTel bid is totally successful in the face of that company's plunging share price and the reduced chances of Optus shareholders accepting SingTel scrip.

Southern Cross owns the 30,500km cable linking New Zealand, Australia, Fiji, Hawaii and the US, and is due to pay Telecom a dividend of $US100 million ($255 million) this financial year.

UBS Warburg analyst Paul Richardson said Telecom could be soft-pedalling on the pre-emptive rights because it wants SingTel to buy out its stake.

- NZPA