TelstraClear chases wholesaling deal

By PETER GRIFFIN

TelstraClear is still intent on striking a wholesaling deal with competitor Telecom to crack the Auckland residential market as Australian parent Telstra looks to raise hundreds of millions of dollars to pay for its local operation.

Telstra's chief financial officer, David Moffatt, said TelstraClear was pressing on with pursuing the resource consents that will be necessary to string overhead telecoms cables around the city.

But it really wanted a cheap wholesaling deal and was looking at alternatives like wireless networks to deliver telecoms, internet and pay TV services to Aucklanders.

"The logical way is for us to work with Telecom and find an appropriate access regime," he said. "Our first preference in these matters is buy versus build."

Moffatt is in the country to drum up interest in a commercial paper issue Telstra is undertaking with the aim of raising at least $200 million.

ANZ is organising the notes programme and has been appointed alongside the Bank of New Zealand and WestpacTrust on a panel of dealers given the task of securing the short-term loan. The notes are expected to be sold in $50 million parcels by tender with a favoured term of 90 days.

Telstra corporate treasurer Cliff Davis said Telstra has initially considered raising $500 million but now thought that optimistic.

The notes programme had been left uncapped so the market could decide the overall figure.

Money raised will take care of the financial requirements of TelstraClear. The money could also be used to make any further acquisitions, though none was yet on the cards.

TelstraClear had total assets of $1.43 billion, external bank debt of $600 million and Telstra secured sub-debt of $610 million. It was valued on Telstra's books at A$82 million.

Moffatt said he was satisfied with the progress of TelstraClear but as a financial chief, was "impatient about the concept of profitability".

He would not give any forecasts on when TelstraClear would break even or its prospects for increasing market share.

But the purchase of Clear, which was better established in the market than TelstraSaturn, had edged Telstra's New Zealand interests closer to profitability, he said.

TelstraClear lost $137 million in the seven months to June 30 on revenue of $356 million. Telstra itself made a profit of A$3.7 billion in the year to June 30, 2002.