The purchase of a controlling stake in Australia's Optus would make Telecom a key player in the development of digital TV here and across the Tasman.
Telecom was fingered yesterday by the Australian Financial Review as a likely taker for UK telco Cable and Wireless's 52.8% holding in the telecommunications company. Telecom declined to comment.
Along with a range of terrestrial assets, Optus operates Australia's four domestic communication satellites, two of which are now owned by Commonwealth Bank of Australia as a result of sale-and-lease-back agreements to raise funds and retire debt.
The Satellite network delivers broadcasts from ABC, Remote Commercial Television Services and SBS. Sky Television in New Zealand has taken a long-term lease on three transponders on an Optus satellite, giving it the capacity to broadcast 40 to 50 channels of TV.
The third transponder comes online in June, triggering the launch of Sky's pay-per-view movie service and possibly flushing out the broadcaster's game plan for Internet services.
The Pace Micro set-top boxes being installed by Sky at the rate of 1300 a day to clear a 40,000-strong backlog all ship with built-in modems. But Sky placed its initial plans to offer an Internet element to its digital TV service on the back burner last year, preferring to develop pay-per-view.
Sky's pay-per-view service will use the modem and the public telephone network to provide a return path for ordering.
Speculation that Cable and Wireless was looking to sell its Optus holding emanated from the UK last weekend. The telecommunications giant has spend some time developing Telstra's struggling competitor. It recently rebranded the company Cable and Wireless Optus in advance of a float in November that raised $A2.9 billion, $400 million more than projected in the prospectus.
The success of the float was due to a relatively low valuation and a gradual improvement in the company's performance - culminating in annual results in September that saw it only $95 million in the red.
As part of the float, Cable and Wireless spent a further $1.45 billion to bring its holding to a majority 52.8% of a company capitalised at $6.65 billion. The AFR says it would still be banned from selling its stake for another four months.