KEY POINTS:
TelstraClear has poured cold water on hopes for a third competitor in the New Zealand mobile market soon.
The company said it was "highly unlikely" that Telecom and Vodafone would face competition unless regulatory conditions changed.
TelstraClear had been considered a contender to build a third network, but
in April cancelled its $50 million high-speed Tauranga network, blaming an "eleventh-hour" change to a roaming agreement with Vodafone.
Vodafone rejected the claim.
The Tauranga pilot had been seen as potentially the first step for a third player in a mobile market split between Vodafone and Telecom.
Telstra chief financial officer and TelstraClear director John Stanhope said it was unfortunate that the last-minute change to the arrangement with Vodafone meant that continuing the venture, and possibly expanding it to Auckland, was just not financially viable.
The project involved wireless broadband: consumers could use a wireless phone as a home phone.
Communications Minister David Cunliffe said this week he was hopeful New Zealand would get a third mobile company in the near future.
The Commerce Commission is currently reviewing the mobile sector, including a commercial undertaking by Vodafone to allow competitors to use its network to establish national coverage - important for any new entrant to the high-cost mobile market.
With TelstraClear dumping plans for a mobile network, the most likely entrant is NZ Communications, formerly Econet Wireless, which has $100 million in private equity funding and access to frequencies owned by major shareholder the Hautaki Trust.
Speaking to the Business Herald while he was in New Zealand for a TelstraClear board meeting, Stanhope criticised the Government decision to accept a commercial deal from Vodafone and Telecom on mobile termination rates - the rate each phone company charges to carry calls from the fixed-line network to its phones.
"Whilst Tauranga was a disappointment there's also been an agreement accepted by the Government between the two mobile operators on terminating rates that also closes the shop a little more."
The deal agreed to by Minister for Economic Development Trevor Mallard last month meant Telecom would reduce its mobile termination rate from 20c a minute to 12c a minute and Vodafone would drop the rate from 20c a minute to 14c, both over the next five years.
The decision overrode a Commerce Commission recommendation to regulate the charges.
"It would be great to have a wireless or mobile string to our bow," said Stanhope. "But it takes quite a lot of investment and again it gets back to the point you'd be not surprised to hear from a CFO, it's important to get a return on that investment."
TelstraClear currently has an agency agreement with Vodafone to resell mobile services on the 029 number, which is due to expire at the end of this month.
The arrangement means TelstraClear customers receive mobile services from Vodafone but TelstraClear manages the customer and billing services.
If, at the end of an unspecified "transition period", TelstraClear and Vodafone do not enter into a new deal, all TelstraClear customers will begin being invoiced by Vodafone.
Vodafone has signed wholesale agreements with Orcon and Compass allowing them to deliver mobile services using Vodafone's network.
Earlier this week Stanhope told the Business Herald that TelstraClear might give up its ambitions to become a major player in telecommunications and instead concentrate on providing services for transtasman business customers if Government telecommunications reforms failed to deliver investment returns.