BellSouth sale leaves questions unanswered

More questions than answers were left in the wake of Vodafone's purchase of BellSouth New Zealand last week - among them the issue of the New Zealand business's status in a promised public offering of Vodafone Australia, which Vodafone says will manage its New Zealand operations. Australian CEO, Dr Brian Clark has said an IPO is 'only a matter of timing'.

More questions than answers were left in the wake of Vodafone's purchase of BellSouth New Zealand last week — among them the issue of the New Zealand business's status in a promised public offering of Vodafone Australia.

Although the $750m purchase of the company was carried out by Vodafone Europe Holdings, the company says the New Zealand business (which will take about six months to make the transition to the Vodafone brand) will be managed as an operational part of Vodafone Australia and will report to its CEO, Dr Brian Clark.

Clark promises that an IPO of Vodafone Australia is "only a matter of timing" after the release of the company's annual report last month. Vodafone Australia made sales of $A349.6 million in the year to March, a jump of 52%, and more than doubled its subscriber base to 545,000.

Vodafone is also the exclusive Australian service provider for the GlobalStar low earth-orbit satellite network, in which it has a 3.14% stake. It recently sold back some of its holding to GlobalStar founder Loral Space and Communications, in a deal which set aside half the $US117 purchase price for Vodafone to invest in GlobalStar ground station equipment and handsets over the next five years.

The listed Global-Star service provider

in New Zealand is Hyundai, but Vodafone is likely to want to be able to sell GlobalStar services through its New Zealand wing. It already works with Hyundai in Hong Kong.

GlobalStar is aimed at supplementing existing GSM networks in rural areas, and it could help overcome the coverage problems which hampered BellSouth.

The Australian connection could also pay off for Auckland-based ISP Voyager. Vodafone acts a reseller of Internet capacity from AccessOne, the corporate brand operated by Voyager's parent company, OzEmail.

Voyager general manager Michael Farrell says his company has discussed such a deal with BellSouth in the past "and I'm sure that with Vodafone coming in here we can look at a similar business model to what's being provided in Australia. It's something that as a company we'd be keen to explore."

Farrell says Voyager has just signed a memorandum of understanding with mobile phone vendor Ericsson, aimed at applying Eric-sson's data-ready products, such as the MC16, for data entry in the field and incorporation with corporate networks and Voyager's VPN services.

Meanwhile, in its home UK market, Vodafone has just embarked on what could be the future of its New Zealand GSM network. Vodafone has begun trials of Universal Mobile Telecommunications System (UMTS), which the company says will be adopted globally as the standard for "third-generation mobile telephony".

The European Telecommunications Standards Institute recently selected CDMA (code division multiple access) as the radio technology for UMTS. Voda-fone will be using its existing GSM network to trial CDMA and packet switched services — a first for cellular telephony. GlobalStar is also CDMA-based.

BellSouth's sale of its New Zealand operation represents the conclusion of its erstwhile strategy in the Asia-Pacific region — a strategy fatally wounded by the failure of BellSouth and its partner Singapore Technologies (STT) to win a cellular licence in Singapore. STT's stake in BellSouth New Zealand was part of a regional strategy based on the prospect of the Singapore licence.

"Although the results have improved in the past year, it became clear that BellSouth New Zealand was not strategic to either owner's portfolio," says outgoing chief Larry Carter.

Carter says the telecommunications regulatory environment was not the reason BellSouth withdrew from New Zealand, but says he gave Vodafone "very candid" advice on the shortcomings of competition laws here.

BellSouth has already turned its attention to the new and vast mobile market in South America and particularly Brazil, where it has already invested billions in bidding for licences and building infrastructure.

Carter, who will stay on his New Zealand role for another five or six weeks, will not be lured to Brazil, he says: "I have a colleague who has taken up a position in Brazil — and his conditions include a 24-hour bodyguard. I am not even remotely interested in that.

"I'll be going home," says the Georgia native. "Everybody likes to go home."

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