Telecom confirms its Optus Mobile interest

By RICHARD BRADDELL

Telecom yesterday formally confirmed its interest in the mobile assets of Australian telco Cable & Wireless Optus.

Chief executive Theresa Gattung said there were several alternatives for structuring and financing any Telecom involvement in Cable & Wireless Optus.

But she declined to detail the indicative terms and conditions it had presented in a formal response to requests from the advisers of Optus and its 53 per cent parent, Britain's Cable & Wireless.

"Telecom sees the Optus situation as one of various opportunities for expansion as part of our broader Australasian strategy," said Ms Gattung.

"Telecom is primarily interested in Optus Mobile, although we recognise that any transaction we might undertake would need to be part of the overall restructuring of Cable & Wireless Optus."

Telecom has frequently been linked with Japanese mobile operator NTT DoCoMo as likely partners in a bid for Optus Mobile.

Meanwhile, the Sydney Morning Herald reported that Singapore Telecom and Vodafone were the frontrunners for Optus' assets. SingTel was looking at taking the place of Cable and Wireless as Optus' 52 per cent shareholder, while Vodafone was interested in the mobile assets only.

Ms Gattung said an Optus restructuring was likely to be complex and involve other parties. She made no mention of who they might be.

The London Financial Times reported two weeks ago that DoCoMo's interest in Optus was flagging, but that might be due to preoccupation with last week's agreement to buy 16 per cent of AT&T Wireless Group in the United States.

With that in hand, it is now expected to send an executive team to Australia next month.

A report on Tuesday by Australian broker Burdett Buckeridge Young quoted Optus chief financial officer Norman Gillespie as confirming Telecom, Vodafone and Singapore Telecom as interested parties and DoCoMo as "still potentially interested."

But that was retracted on Wednesday after Optus said the analyst had misinterpreted Mr Gillespie's comments, which it said simply restated what had been speculated on in the public domain.

Nevertheless, Optus would propel Vodafone from a distant number three in the Australian mobile market.

Vodafone and SingTel also have the advantage over Telecom of comparatively deep pockets.

While Ms Gattung said Telecom had alternatives for the structuring and financing of any involvement in Optus, a deal would be complex, given Telecom's sharemarket capitalisation of $9.3 billion, and its goal of taking control of assets potentially worth $A10 billion.

It has already signalled that it could possibly float or issue bonds against its half-stake in the Southern Cross Cable, which is also 40 per cent owned by Optus.

That an agreement would also have to satisfy Optus' minority shareholders might play into Telecom's hands.

The shareholders would end up with ownership in a strong transtasman mobile player.