Telecom plays down trans-Tasman spin-off of AAPT deal

If there are any synergies for Telecom in AAPT's 50/50 joint venture with America Online, Telecom isn't about to admit it.

If there are any synergies for Telecom in AAPT's 50/50 joint venture with America Online, Telecom isn't about to admit it.

A long-awaited deal between the 80% Telecom-owned AAPT and America Online came to fruition yesterday, with the two organisations announcing a 50/50 joint venture to operate AOL Australia.

The joint venture will also launch a new internet portal to deliver wireless content services and through exclusive rights will offer AOL and Compuserve services on both PC and mobile wireless platforms throughout Australia.

"We'd hope of course that it would make our investment in AAPT more valuable but other than that there's no implications," says Telecom financial communications manager Angus Barclay.

"Telecom's involvement was purely as shareholder and an advisor. They came to us and obviously we've got expertise in the consumer ISP space, so they asked us about what that involved. And then they went to various other parties and threw all that advice into the mix and that's what they've come up with.

"Telecom is very different from AAPT. Obviously they're the third player over there and we're first here. Our ISP, Xtra, is completely different from either AOL Australia or connect.com.au. So our strategic needs and need strategic partnerships and so on are very different."

Telecom has played up some trans-Tasman synergies with AAPT in the last six months, with both companies deciding to roll out the same Lucent CDMA mobile platform. On the other hand, Telecom has already looked forward to deploying new mobile services and technologies from its technology partner - and AOL's business rival - Microsoft.

"What we do with our CDMA network here may not be the same as AAPT does with its CDMA network," says Barclay. "Again, they're a separate company. Although we have an investment in them, their drivers are different from our drivers. Xtra is assessing strategic partners for New Zealand but we've got a different set of drivers from AAPT."

AOL and AAPT yesterday confirmed that the joint venture would capitalise on AAPT's Australia-wide sales, marketing and distribution channels, and network infrastructure. The joint venture will contribute significant cost savings to AOL Australia, as well as providing AOL Australia with access to AAPT's 650,000 Australian customers, the companies said.

Ron Nissen, AAPT's chief operating officer, dismissed industry speculation that the telco was obliged to dole out over $100 million to AOL to be included in the joint venture, although he said AAPT expected to spend $100 million over the next two years on research and development for the project.

The new organisation has already seen its first casualty: AOL Australia's managing director, Carol Veriga, has stepped down and will be replaced by Dr Brett Wayn while the joint venture finds a CEO.

According to officials, Veriga will remain with AOL Australia in the short term as a consultant while Wayn, currently director of AOL Australia content and programming, will move to the position of general manager to oversee the organisation's day-to-day operations. No other staffing changes were planned, according to AOL international vice president Tom Hardart.

Nissen said both AAPT and AOL still needed to resolve issues related to converting AOL content to AAPT's existing infrastructure, in terms of both technology and content. An appropriate balance of global and local content was yet to be finalised, the companies said.

The joint venture did not expect details of its wireless web portal, including pricing structure, will be finalised for some months to come. "We haven't finalised the details of how we're going to execute," Nissen said.

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