Spinoffs from Telecom split

By RICHARD BRADDELL

The restructuring of Telecom's empire into two transtasman mobile and internet businesses will make it easier to spin them off - or enter alliances - says Telecom's chief executive, Theresa Gattung.

Telecom is melding its operations with those of its Australian subsidiary, creating six business units.

Four of them will be the Australian-based units AAPT and Telecom Australia, plus Telecom's New Zealand sales and service and the EDS/Microsoft joint venture esolutions.

Voice and data will be run as discrete businesses in Australia and New Zealand.

But while the restructure would make a capital reorganisation or spin-offs much easier, Ms Gattung said the primary objective was to get the integration of AAPT over with as quickly as possible.

"This new structure is not just about preparing Telecom to think about these businesses in a focused way which might make it easier in terms of a capital restructuring of any sort. It's actually about making sure we succeed with the integration of AAPT moving forward," she said.

She refused to be drawn on Telecom's objectives with regard to the imminent sale of Cable & Wireless Optus' cellular business, or any relationship that might develop with suggested partners such as Japan's NTT DoCoMo, or capital changes that might eventuate.

While such matters were left to journalists' conjecture, Ms Gattung anticipated that Telecom in Australia would continue to grow faster than the region's GDP, and would outperform the last year.

The restructure will mark the departure of AAPT acting chief executive Ron Nissen, who oversaw the Telecom takeover.

Telecom's general manager networks, David Bedford, will move to Sydney to become chief operating officer, while the internet business will be headed by general manager internet, Graham Mitchell, who will move to Sydney.

Mr Bedford will be replaced by Simon Moutter, and the former manager of data and voice, Mark Ratcliffe, will become the group's new chief information officer.

Telecom's head of mobile, Mohan Jesudason, will continue to head the transtasman mobile business, but will remain in Wellington.

The restructure prompted one commentator to observe that Telecom now had four Australian- focused businesses and two centred on New Zealand.

Ms Gattung said no decision had been made on whether Telecom would bid in Australia's third generation mobile spectrum, which will be auctioned next year.

The Australian and New Zealand mobile business would continue for the time being as two separate legal units under the same management. The internet business would also comprise several separate companies.

Merging the internet companies was complicated by AAPT's joint venture with America Online

AAPT's data business is unlikely to be legally merged with Telecom Australia in the short-term, simply because it is 5 per cent-owned by Commonwealth Bank, which signed a $A5 billion ($6.5 billion) contract for its telecommunications management this year.

While Mr Bedford will make commercial decisions in Australia on AAPT buying or building networks, network and IT architecture and planning would be run under a joint corporate approach.

"We don't expect to make huge savings from centralising our corporate functions, nor do we plan to have redundancies inside the Australian business. This is our growth opportunity as opposed to a business that we don't want to retrench at all," Ms Gattung said.

No decisions on running common brands between Australia and New Zealand would be made before Christmas.

Ms Gattung said the next 18 months would differ from the past in that there would be winners and losers among telco stocks, rather than them all riding the same wave.