Telecom confident of settling content deal with Foxtel

By PETER GRIFFIN

Telecom is set to follow rivals Telstra and Optus in securing a content-sharing deal with pay TV operator Foxtel in Australia.

Chief executive Theresa Gattung said a deal with Foxtel would be finalised soon - sources say as early as this week.

Telecom's Australian business AAPT cannot compete on bundled deals with Telstra and Optus, and is going after more discerning customers.

But being able to bundle pay TV, telephone and internet services on the one bill is a key requirement for consumers.

"We will hardly make any money on the Foxtel component of it, but being able to offer a whole range of products and services, we think, is important," Gattung told the Australian Financial Review.

Without a cable network of its own, AAPT will deliver pay TV over Telstra's cable network, which reaches 2.5 million Australian homes.

AAPT customers not on that network will use satellite dishes to access Foxtel content.

At home, Telecom eventually wants to deliver Sky to its customers in much the same way as Telstra delivers Foxtel to its subscriber base.

It has been negotiating with Sky to revive its "Sky-Fi" pay TV, phone and internet bundling deals for some time.

A future content-sharing arrangement will be more extensive than anything Telecom has done with Sky in the past.

In both countries, Telecom is ultimately dealing with pay TV king Rupert Murdoch.

His company News Corp owns 25 per cent of Foxtel. Telecom arch-rival Telstra owns 50 per cent and Publishing and Broadcasting owns the balance.

News Corp also has an interest in Sky through its 45 per cent shareholding in INL, which this month off-loaded its publishing business to Fairfax.

INL owns 66 per cent of Sky and is tipped to move to full ownership using the proceeds of the $1.188 billion sale to Fairfax.

Gattung said AAPT wanted to bundle AOL's high-speed internet service with its own telephony products and include mobile services it resells from Vodafone and Hutchison, which launched its 3G service last week.

Only 21 per cent of Australian households subscribe to pay TV services, leaving plenty of room for subscriber growth.

The competition

* Australia has three main landline telephony companies - Telstra, SingTel Optus and AAPT.

* Telstra offers Foxtel pay TV, telephony and high-speed internet, delivered over its broadband cable network.

* Optus also offers a bundle including Foxtel's pay TV service.

* AAPT would deliver its bundled Foxtel service over infrastructure leased from Telstra.