Telstra silent on Clear stake

By Richard Braddell

WELLINGTON - Australian telecommunications giant Telstra has declined to comment on speculation that it was negotiating to buy a stake in Clear Communications.

Spokeswoman Karen Barrett said Telstra did not comment on speculation.

The position was identical to that of BellSouth New Zealand's management before the company's sale to Vodafone last year, and that of Telecom before it finally confirmed it had bought into Australian carrier AAPT last week.

A move by Telstra could go a long way to arresting Clear's drift in a fiercely competitive marketplace. In the March 1998 financial year, the drift resulted in net profit being more than halved to $9.2 million.

That position is thought to have worsened considerably due to competition intensifying in the long-distance and the corporate markets, where Telstra has made inroads.

Fiscal 1999 accounts will not be released until September. Some expect the company will report a loss; 25 per cent shareholder TVNZ recently disclosed receiving dividends of $1.2 million which may have come from Clear, down from $3 million the year before.

Although competition is the obvious source of Clear's woes, the company has been ill-placed to respond, given the doubtful commitment of its shareholders. They have shown little appetite to invest in new projects.

While British Telecom said last year it was negotiating to buy the 25 per cent held by MCI, the sale has yet to be finalised, and Todd Corporation and TVNZ are seen as likely to sell if they can.

Clear is also regarded as a loser if a Telecom entry to Australia results in intensified competition between Telstra and Telecom in New Zealand.

Telstra NZ's chief executive, Peter Williamson, refused yesterday to comment on the shareholding matters of "another company." Small signs of a thawing in a sometimes frosty relationship between the two have been noted, particularly since they have given moral support to each other in the Telecom rebilling dispute that goes to court in Auckland on Monday.

Both carriers also use each other to complete some services and Clear is one of the "best of breed" bidders to provide services under Telstra's total management services contract for Fletcher Challenge's telecommunications.

"We are part competitor, part collaborator and part enemy. It's a bit of a mixed-up world these days," said Mr Williamson.

For Telstra, Clear at the right price would provide facilities to service its targeted corporate market.

Having relied heavily on other companies' infrastructure during its entry into New Zealand, Telstra is planning to invest $60 million to roll out its own CBD fibre network. This would be perfectly supplemented by Clear's existing CBD network and long-distance fibre backbone linking the main centres.

If Clear were to disappear into the Telstra fold, it would also be able to take advantage of a more favourable interconnection agreement than the one that is the subject of bitter dispute with Telecom.