Telecom has no plans to increase its holding in the Southern Cross cable and speculation about the matter in the wake of the WorldCom scandal is premature, say Telecom public affairs manager Martin Freeth.
WorldCom owns 10% of the cable, Telecom 50% and Optus Cable and Wireless, owned by SingTel, 40%.
“As part of the shareholders’ agreement, there’s a mechanism for independent valuation of the shareholding.”
Freeth doesn’t believe any one shareholder has pre-emptive rights should WorldCom’s stake come on to the market.
“It would be worked out between the other shareholders.”
Telecom has business relations with WorldCom, which are continuing as the US carrier is reeling from revelations that $US3.8 million in operating expenses was booked as capital investment in its accounts.
“WorldCom provides some back-end data carriage off the US end of the cable and provides some data circuits for the private networks of New Zealand corporates operating in the US.
“We also have that relationship with other carriers in the US, so if need be, that traffic could be carried by others.”
Telecom also has international call traffic business with WordCom, in the form of bilateral exchange of call minutes and global transit call business, “which involves us picking up traffic from other carriers and delivering it to other countries through our points of presence in London, Tokyo and Los Angeles.”
It’s business as usual regarding the Telecom-WorldCom relationship, Freeth says “and while we’re being particularly cautious about the terms of credit, we’re comfortable and have minimal exposure.”
New Zealand customers of ISP Voyager are also potentially exposed, as WorldCom owns Voyager.
In the US, the fallout from WorldCom’s woes could hit telecom equipment manufacturers hard, as it had been one of the less conservative carriers when it came to buying.
Computerworld’s US sister publication Network World says Juniper Networks relies on WorldCom for at least 10% of its business and other suppliers, including some start-ups, had just signed or were about to sign significant deals with WorldCom.
WorldCom has temporarily suspended all purchase orders.