TelstraClear upbeat on performance

By PETER GRIFFIN telecoms writer

TelstraClear chairman David Thodey has defended the company's performance in the lucrative corporate telecommunications market, pointing to $16 million in newly struck deals.

Thodey, who heads Telstra Business and Government, a division contributing around A$5 billion to the Australian telco's revenue, said he was happy with TelstraClear's performance for the year ending June 30.

He was responding to claims from Telecom at its results briefing last week that it was not experiencing strong competition in the corporate market. Telstra announces its full-year result this month.

"We've done very well in markets where we compete," said Thodey, who last week spoke at a TelstraClear event organised to celebrate 20 years of CER (closer economic relations) with Australia.

But Telecom is claiming victory in winning corporate business. Chief operating officer Simon Moutter pointed to 3 per cent growth from this market segment which contributed to a good result for the core New Zealand "wireline" business, especially in the three months to June 30.

"We do have a strong sense that we are winning in the corporate market in New Zealand.

"We're out there competing harder and we've taken a lot of steps to enhance service levels, outbound calling activity and retention programmes," said Moutter.

The latest series of contracts secured by TelstraClear with the Ministry of Social Development, BP, Gough Group and nine North Island educational institutes range from one to four years and cover voice and data service provision.

Telecom and TelstraClear are increasingly chasing the same corporate customers, especially transtasman companies.

TelstraClear's network has limited reach, which is a disadvantage when trying to negotiate deals with companies that have a national presence.

The ability to wholesale key services from Telecom at discounted levels has already been secured by TelstraClear in a decision from the Commerce Commission, but unbundling of Telecom's local loop - opening Telecom's network up to competitors - would give TelstraClear the same reach as Telecom.

While most countries around the world have unbundled, it is by no means certain it will happen here.

Thodey said TelstraClear would have to reconsider its investments in New Zealand if a looming Commerce Commission decision on whether to unbundle the local loop maintains the status quo.

But TelstraClear ultimately sees unbundling as giving it the biggest leg-up in broadening its reach.

TelstraClear's intention to build a 3G mobile network here is one major investment decision that may be affected by the unbundling outcome.

It has shortlisted equipment makers Ericsson, Nokia, Nortel Networks and Siemens to develop proposals for a network.

If TelstraClear goes ahead, it might go live with a true 3G network before its parent across the Tasman.

While TelstraClear has requested proposals for a wideband CDMA network here, Telstra's path to 3G for Australia is still far from clear.

"We're still considering how we can participate in that market," said Thodey.

"We'll only roll [3G] out when we see the applications. For us it's not a good financial investment."

TelstraClear and Telstra are both enthusiastic advocates of CER and want closer integration of the New Zealand and Australian competition watchdogs and telecoms regulators.

Thodey said the 20-year-old agreement had probably benefited New Zealand more than Australia.

"Most Australians don't even know about CER. They just expect [the two countries] to be integrated," he said.

TelstraClear chief executive Rosemary Howard said she had found it easier to do business in New Zealand than Australia, where she previously headed Telstra's wholesale division.

New Zealanders were friendlier to do business with and regulation had a lighter touch, she said, jokingly referring to the Australian business environment as "legalistic, bureaucratic and blokey" in comparison.

She advised New Zealand companies to form partnerships before landing in the Australian market. But overall she said their chances across the Tasman were good.

"Kiwis are too good to be worried about being swallowed by kangaroos".