Rumours keep on swirling around Telecom

Is the beleagured incumbent seeking to cushion regulatory blow with asset sales?

Telecom is the target of several rumours, adding to its woes as it fights a rear-guard action against impending regulation that seeks to expose it to greater competition.

The Australian newspaper is reporting that Telecom is once again trying to sell AAPT, its Australian loss-making subsidiary. However, nobody’s interested in AAPT at the current asking price of A$450 million (NZ$522 million), The Australian says.

AAPT was bought by Telecom for $2.1 billion in 2000, but, after several write-offs, now has a book value of only $270 million, after just six years. The Australian subsidiary has failed to make headway in the Aussie market, where it has faced withering competition from incumbent Telstra and other telcos.

However, Telecom denies the sale of AAPT is on the cards. Spokesman John Goulter says Telecom won’t comment on speculation, but he adds that a sales process is not underway.

AAPT recently angered its Australian wholesale partners by effectively forcing them to vacate the carrier’s datacentres after it insisted they use its services if they wished to remain.

But if the possible sale of AAPT has the industry yawning Telecom’s directory business is seen as a far more attractive proposition.

Valued at around $1.5 billion and highly profitable, Telecom CFO Marko Bogoievski has indicated that the directories will be sold off, as they will struggle to match search-engine giants such as Yahoo and Google.

In the wake of Telecom’s deal with Microsoft over MSN, the telco is said to be in talks with either Google or Yahoo — or both — over a tie-up with Xtra.

Bogoievski says Telecom would prefer to partner with a strong player in the field and could be using the directories as a lure for the search engine giants.

After announcing a 10% cut in its workforce recently — some 700 of its approximately 7,000 staff — Telecom was quick to announce that its management team was exempt from the round of redundancies coming up around Christmas.

Computerworld understands most of the redundancies will be in areas where there are overlapping roles, such as sales and middle management. Legacy groups, such as Telecom Advanced Solutions and Business Solutions, are also said to be in the cross-hairs, whereas service provider Gen-I, which was merged with Computerland, is set to suffer less as it is already “lean and mean”.

However, a management team shake-up could be on its way, too. Bruce Parkes, the chief architect of Telecom’s present strategy, which led to the Government turning up the regulatory thumbscrews, has gone and CEO Theresa Gattung is seen as part of the same Old Guard. The Sunday Star Times reports that Vodafone’s Tim Miles is on his way back from the UK, to take over from Gattung at the helm of Telecom.

Miles is credited with having pushed Vodafone NZ ahead of Telecom in the mobile market and could shake the company up even further.

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