Dollar dips over talk of Telecom eyeing Optus

By Rob Hosking

Friday 30th June 2000

Telecom may be one of the bidders for the mobile arm of Australian telco C&W Optus' mobile arm - but it is unlikely to be at the front of the queue.

Neither Telecom nor Optus were commenting yesterday on the latest rumour the New Zealand carrier was lining up to buy the Optus mobile operation, which holds a third of the Australian cellular phone market.

Rumours of Telecom buying into Optus are something of a hardy perennial but what seems to have excited the markets was that this latest buzz has far more detail than past waves of speculation.

It was largely on the strength of this latest rumour that the Australian dollar lifted half a cent against the New Zealand dollar yesterday.

However, there is a belief among some analysts that a bid by Telecom is less likely now, given its takeover last year of Australia's third carrier, AAPT.

First, Telecom has already established an Australian presence through that purchase, coming in at a much lower level than Optus.

It is also widely felt that while Telecom got AAPT at a favourable price, the New Zealand-based carrier has less cash to slosh around on further transtasman purchases.

"One option is to pool the mobile operations of Telecom, AAPT and Optus into one transtasman company and float it," one analyst commented.

"But whether the Australian regulator would allow them to do that is quite an important question."

C&W Optus had also bid for AAPT last year but ran foul of the Australian Competition and Consumer Commission.

A reverse bid - Telecom is seen as likely to bid for any Optus stake through its Australian subsidiary - is not seen as any more likely to be viewed favourably by the commission.

Another analyst suggested that while Telecom might be asked to bid for part of Optus, it was unlikely to be in the best position to do so.

"There's other Asian carriers with more cash to pull off something like that - SingTel, for example."

Another possibility was seen to be bids from media conglomerates, with Packer being the most likely.

Optus' mobile operation is valued at $A15 billion, although some analysts suggest this is now on the high side.

However, mobile generates $A2 billion a year in revenue for the company, and while mobile stocks have come back somewhat from their golden status six months ago, they are still one of the two growth areas of telecommunications.

Optus is the second-ranked carrier in Australia but owner Cable & Wireless is divesting itself of holdings in the consumer area, preferring to concentrate on the corporate data market.

In the past week the company has agreed to sell its Hong Kong operation to Pacific Century.

Comments from our readers

No comments yet