Analyst claims Telstra wants Telecom

Telstra is embarking on a five-year plan to dominate trans-Tasman telecommunications that includes taking over Telecom, according to Australian telco analyst Paul Budde.

Telstra is embarking on a five-year plan to dominate trans-Tasman telecommunications that includes taking over Telecom, according to Australian telco analyst Paul Budde.

Budde says he has been watching Telstra's moves in New Zealand for some time, wondering just what the company was up to. Now he says the pieces are falling into place.

"New Zealand is a market only as big as Melbourne so what is it that Telstra wants? Telstra has money to burn, so much it doesn't know what to do with it all. Why go after the New Zealand market?"

Budde says comments made recently by Telstra chief executive Ziggy Switkowski late last month reflect this desire. Switkowski and New Zealand-based TelstraClear chief executive Rosemary Howard discussed Closer Economic Relations (CER) with trade minister Jim Sutton as well.

"It's something I've been alluding to for the past year or so and now it's all falling into place."

Telstra is arguing that the New Zealand regulatory regime has not brought about the dramatic changes needed to really drive competition in the New Zealand market, unlike the Australian market where numerous players compete every day with Telstra.

"They know they can't just launch a hostile take over of Telecom. The Commerce Commission and the ACCC wouldn't stand for it. So they've launched this subtle long-term strategy to massage the political situation."

Telecom public affairs spokesman John Goulter says Budde's speculation has no real grounding in fact. However, on the issue of closer economic ties with Australia, Goulter says it's already happening.

"There is nothing to stop telcos setting up in either country. Telecom is in the Australian market with AAPT and Telstra's over here." Telecom already has customers that are working in both countries and Goulter says those larger clients need a trans-Tasman telco and already use one.

"The question of harmonisation of regulatory regimes is somewhat different - Australia and New Zealand have different regulatory regimes for a reason and it would be quite difficult to come up with one regime that covered both countries." New Zealand has re-introduced regulation for the sector with the Telecommunications Act 2001 while Australia is in the process of removing regulation to allow competition. Goulter says the working environments are quite different.

"On top of which you'd have to wonder if harmonisation didn't simply mean the Australianisation of the regime and we'd simply end up with the Australian regulatory environment here in New Zealand."

Budde says the political will to sell the remaining shares in Telstra simply isn't there at the moment.

"The government wants to but the Senate is opposed to it. If the Liberals win another term they will no doubt say they have a mandate to sell off Telstra but until then, no."

Budde says one option could be to sell a parcel of Telstra shares, around 10% to test the waters.

Budde likens the situation to Air New Zealand's proposed merger with Qantas.

TelstraClear referred Computerworld Online to Telstra Australia for comment, but Telstra did not return our call before deadline.

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