SingTel the victor in Optus marathon

By RICHARD BRADDELL utilities writer

Singapore Telecom's victory in the battle for control of Australia's second carrier, Cable & Wireless Optus, has left Telecom NZ out in the cold.

But the New Zealand company can take comfort from the thought that rumours of a second SingTel deal involving its rival Clear Communications appear unfounded.

SingTel's $A17 billion ($20.5 billion) Optus offer, which will be put formally to Optus shareholders in eight weeks, keeps Optus intact as a strong number two to Telstra, but does nothing to promote the consolidation among the smaller Australian players that was hoped would benefit Telecom.

Aside from the break-up of Optus that would have taken place had Vodafone won control, it was likely that fourth-ranked mobile player Hutchison would have picked up one million customers from Vodafone as the latter endeavoured to satisfy Australian competition concerns.

In a second prong to the Hutchison arrangement, it is thought that Telecom would have provided funding to a joint venture with Hutchison that would have then built a third generation mobile network.

But those slim hopes were dashed when Vodafone threw in the towel on the weekend, stating that the price tag on Optus was too high to allow reasonable shareholder returns.

Telecom yesterday declined to comment on its ambitions vis-a-vis Hutchison, but said it was still committed to growth in Australia through both alliances and acquisitions.

Telecom has still to state whether the construction of a $A600 million Australian CDMA cellular network it suspended before Christmas after spending $A125 million will resume.

But if it wishes to operate its own cellular infrastructure, the case for an alliance with Hutchison remains compelling, even if it has less than half the number of customers that would have come on board if the original Vodafone/Hutchison scenario had happened.

But even a Telecom/Hutchison alliance would face an uphill battle in Australia's highly competitive market given their minuscule size.

The deal also raises questions about whether Singapore Telecom might wish to extend its Australian empire into a transtasman competitor to Telecom and TelstraSaturn.

A rumour that SingTel had done a deal with Clear Communications owner British Telecom over its New Zealand offshoot appears ill-founded. Clear Communications chief executive Peter Kaliaropoulos said that if such a deal existed, then someone had better tell him.

"There are a lot of rumours right now. None of them have a lot of substance," he said, adding that BT had its timeframes for decisions over its ownership of Clear, but everything would be up in the air until then.

While a management buyout has been offered as a possibility, TelstraSaturn is also seen as a logical buyer.

Jump Capital (Fay, Richwhite and the Todd family have been named previously as backers) has also been mentioned as a possible buyer while UnitedNetworks has been seen as a potential contender for Clear's network business.

A source said that while consideration of Clear's ownership was heating up, a conclusion was months rather than weeks away.

Jump has a $A50 million investment in Crown Castle Towers, a company that owns and manages cellular towers in Australia. It is subscribing another $A30 million to pay for the acquisition of Vodafone's towers.