Australia-based Austar, co-owner of TelstraSaturn, today announced it will lay off 400 staff members on New Year's Eve as part of its move to re-focus on core business.
Austar currently owns 50% of Wellington-based telco TelstraSaturn, but that percentage will fall to around a third once TelstraSaturn's acquisition of Clear Communications is completed. The other owner, Telstra, has signed an agreement to buy out Austar at the end of the 2004 financial year if both parties agree at that time.
Austar has indicated it will focus on its core business of cable TV provision, while Telstra has signalled it will move towards the business end of the telco market, meaning a split in the New Zealand company is inevitable. Austar and its owner, UnitedGlobalCom, have both been badly hurt by the recent economic downturn in Australia and the US.
"Austar had a gap in the funding required to reach a positive cash flow and by reaching this agreement to pull back out of New Zealand we can bridge that gap," says Austar's head of corporate affairs, Bruce Meagher. The agreement will see Telstra paying Austar's share of TelstraSaturn funding in the short term.
TelstraSaturn's purchase of Clear Communications from British Telecom is currently under review by the Commerce Commission. A decision is expected by the middle of December.
Austar says its move includes the outsourcing of field sales, installation and support work in Australia along with the closure of its wholesale operation. Regional offices will also be closed around Australia and closing the Austarnet internet service. There is no word on layoffs in the TelstraSaturn camp.