Telecom is putting the blowtorch on Clear.
Having wooed Ihug into an agreement to adopt new 0867 numbers - an issue on which Clear still reserves the possibly of legal action - Telecom is coming after $20 million in interconnection fees it says it is owed by Clear.
In a statement yesterday, Telecom seems to imply that it is seeking to recover the money while Clear is still in a fit state to pay it. Clear recently became wholly owned by British Telecom.
Telecom says Clear began witholding payments due under its interconnection agreement with Telecom in January 1997 and has now sought orders in the High Court to "safeguard" its ability to recover money owed by Clear.
Telecom says it receieved financial advice that it would be "commercially imprudent" for Telecom to be an unsecured creditor of Clear for sums exceeding $20 million.
"Clear already owes Telecom over $20 million. This debt is rising monthly and potentially will keep rising until this matter is finally decided by the courts. This could be one or two years away, when the debt could be up to $40 million," Telecom Manager External Relations Clive Litt said in a statement yesterday.
"At the same time Clear's profitability is reported to have dropped and there has even been speculation Clear could run at a loss this year. We believe that there would be real doubt about Clear's ability to satisfy a judgment in Telecom's favour for $20 million or more, particularly if Clear's profitability continues to decline at the same rate as in recent years."
Telecom, whose introduction of the new 0867 number range for Internet calls was suspected by a move to get around interconnection payments to Clear is asking that Clear "do the principled thing," says Litt, "rather than reneging on its obligations under a major commercial agreement negotiated at length.
"Alternatively we have asked the court to safeguard the debt. We have proposed a variety of ways of achieving this: by appointing a receiver over the debt, or having the withheld amounts paid into an interest bearing account held by the Registrar of the High Court or by Clear providing suitable security for the withheld sums.
"We just want Clear to pay the money it owes us. If the court will not order payment Telecom needs sufficient security to be sure Clear can repay the increasingly large amounts it owes."
Clear could not be contacted for comment late yesterday.