Between the lines: Gattung gets set to move goalposts

Telecom chief executive Theresa Gattung says the company is at a point of inflection. She is close to mincing words. Just about every aspect of Telecom's business is about to change, if it has not already.

To begin with, the bid to buy out the AAPT minorities clears the way to restructure Telecom into a transtasman force that will be much more than a niche player in the burgeoning data markets exemplified by the internet.

Already, AAPT has the clout to rival Optus in Australia's corporate market and, with the combined heft of Telecom, it is very well positioned to continue its push further into Australia's residential and small business markets.

Many questions remain to be answered.

How will AAPT and Telecom managements be integrated? With business units operating on a transtasman basis, management restructuring is inevitable.

And what will happen to the brand? Ms Gattung says there will be some effort to harmonise branding. But with many of the two companies' products often sold under their own rather than company brands, that may not be such a problem.

There is a bigger question.

Will Telecom move its head office to Australia? Ms Gattung's response: that is not currently under consideration.

Even bigger still, what will Telecom do regarding spinoffs?

A year ago, Telecom was mooting the idea of creating tracking stocks so that the full value of units such as Xtra and the Southern Cross cable could be recognised. Telecom then put the idea on ice, and its share price suffered as a result.

But with the AAPT minorities out of the way, the ease of floating off a transtasman cellular business, for instance, is vastly improved.

But Ms Gattung was less than unequivocal on the issue of spinoffs yesterday. She said Telecom was keeping an open mind on the future shape of the group.

But selldowns are not the only way of reorganising Telecom.

As it made plain yesterday, it is in the process of shifting from a traditional networks business to an online one, and that raises a question of whether it even needs to own its network any more

British Telecom is reportedly weighing the same question.

For Telecom, the answer might well depend on the outcome of the telecommunications inquiry, which is already talking about mandatory wholesaling to other carriers.

The next step of local loop unbundling, which would give competitors access to Telecom's network at cost, seems unlikely now but cannot be ruled out in the future. If it comes, the value in owning a heavily regulated activity would be much reduced.

Because of the Kiwi Share, a separation would almost certainly require the Government's consent.

Again, Ms Gattung's line, when questioned on this yesterday, was that all options were possible.

And no, the Government has not been approached.