Telecom has "gone off half-cocked" over the issue of ownership rights to the Southern Cross Cable Network company, according to a Cable & Wireless Optus source.
Telecom head Theresa Gattung is quoted by Sydney's online iTnews saying the purchase of Cable & Wireless by SingTel triggers a "pre-emptive rights" clause in the ownership of Southern Cross Cables. That gives Telecom the right to buy C&W's 40% of the cable company, Gattung says, giving it 90% ownership.
But a Cable & Wireless Optus source, who didn't want to be named, told Computerworld that wasn't the case.
"Telecom is confusing Cable & Wireless Optus with Optus Networks. Cable & Wireless Optus is not the joint venture partner in SCC; Optus Networks is." Optus Networks is wholly owned by Cable & Wireless Optus, but the pre-emptive clause only takes effect if the management of the company is affected, claims the source.
"In this case, SingTel’s purchase is of the parent company and doesn’t affect the management of Networks at all. They’re barking up the wrong tree." The source claims Cable & Wireless Optus asked for the clause to be inserted into the ownership contract and is certain of its position on the matter.
"Three sets of high-level lawyers have looked at this - one lot from Cable & Wireless Optus, one lot from SingTel and one from Networks. They all agree. I can only assume Telecom’s advisers didn’t read it thoroughly."
Telecom refused to comment on the matter.
The third partner in the southern cross company, MCI WorldCom, with 10%, would not comment on the issue, saying it did not affect the company’s shareholding.
Nor would Southern Cross Cable Asia-Pacific director Ross Pfeffer say anything about the matter.
SingTel’s corporate communications manager, Tham Yim Kheng, would only confirm SingTel’s position on the pre-emptive rights issue. "The Southern Cross Cable project contains provisions on pre-emptive rights; however, such provisions will not be triggered by SingTel's acquisition of Optus."
Telecom hopes to reap a dividend from its stake in the cable this year estimated to be about US100 million this year and roughly half that for each of the following three years.