Telecom says has ties with WorldCom but little exposure

4.15pm

Telecom New Zealand has significant relationships with scandal-ridden telecoms giant WorldCom Inc, but minimal financial exposure.

WorldCom shocked global stock markets yesterday by revealing it had improperly booked almost US$4 billion (NZ$8.3 billion) in expenses as capital expenditure.

Telecom NZ public affairs spokesman Martin Freeth told news agency Australian Associated Press (AAP) that Telecom and WorldCom had significant customer and supply relationships, and it would be closely examining that relationship.

For example there were swaps on the international call minutes market, as well as a data network relationship in the US.

"But we have minimal if any exposure to them in the context of our trading relationship, and no impact on our customers from that," he said.

Mr Freeth said it was business as usual with WorldCom regarding the Southern Cross Cable Network venture, and Telecom maintained its position regarding future dividend payouts from the venture.

"As we've previously indicated we lack visibility around the extent and timing of future dividends coming from Southern Cross Network as a result of softening demand for international bandwidth and cable capacity," he said.

The Southern Cross Cable Network (SCCN) says its expects minimal impact on its submarine cable operation from ongoing problems at WorldCom, which holds a 10 per cent stake in the network.

The cable is 50 per cent-owned by Telecom New Zealand, 40 per cent by Optus and its owner Singapore Telecommunications Ltd, and 10 per cent by WorldCom.

The cable is a 30,500km fibre loop connecting Australia, New Zealand, Fiji, Hawaii and California.

- NZPA