Telecom rethinks Aussie plan

By RICHARD BRADDELL

Telecom's Australian subsidiary AAPT could scrap its $A700 million cellular network plans after it agreed with supplier Lucent Technologies to suspend construction until March.

While delays in getting the network built were given as the reason for a comprehensive review that will take place during the suspension period, sources say Telecom is reconsidering its position in the light of its planned bid for the Optus mobile network in Australia.

If Telecom were to succeed with Optus, it would end up with a much larger network that uses incompatible GSM technology rather than the more advanced CDMA chosen by AAPT.

Telecom officials were not available yesterday and an AAPT spokesman declined to comment, but Lucent Technologies executive Luisa Megale emphasised that the suspension was by mutual agreement.

The project is worth $A500 million to Lucent.

In a statement to the stock exchange, Telecom's general manager (mobile), Mohan Jesudason, said there were commercial matters to be worked through between Lucent and AAPT and he could not make any comment on the likely outcome of the review.

"During the period of the review, we have mutually committed to exploring all the options open to us in the context of the fast-evolving Australian mobile market," he said.

A decision to scrap the network would be logical if Telecom succeeded in its Optus aspirations.

But it would also scuttle Telecom's hopes for an integrated transtasman cellular network based upon CDMA.

Mr Jesudason said Lucent was on target with the construction of Telecom's $200 million CDMA network in New Zealand which is due for completion next July.

In New Zealand, Telecom has been at a competitive disadvantage to its arch rival Vodafone, which offers more advanced services from its GSM network as well as roaming to Australia.

The suspension comes on the day that Telecom's share price slumped 20c to a $5 close after trading down to $4.95, its lowest in six years.

The news also comes amid rumours that Telecom's present business review may be cutting deeper than suggested.

Asked about the rumours this week, chief executive Theresa Gattung said the review was proceeding as previously announced and that nothing surprising was in store.

But other sources say that while redundancies may be possible, staff are being offered jobs in Australia.