Forum Archive Index - January 2001

["Phil Boeyen" <pboeyen@sharechat.co.nz>]

Hugh and Douglas - great to see some good debate on Telecom.  From where I stand the C&W Optus float could well win a prize for the most news stories based on rumour rather than fact, but given the lack of communication from either Telecom or C&W or DoCoMo or any of the other parties I suppose it is to be expected.

 

I  believe Telecom had no choice but to go overseas for growth, and whereas Telstra is aiming for growth in Asia it makes sense for a smaller NZ telco to head to the next biggest market ie Australia.

 

I have not heard that Telecom is having trouble digesting AAPT, and given the increased cashflow from owning Aussie's third biggest telco am keen to see just how AAPT helps the Telecom bottom line when it issues its next result.

 

Telecom has not said anything publicly about trying to 'go it alone' in buying C&W's assets - I doubt it could.  I am sure (would hope?) the company has any number of funding scenarios which could include selling off its Southern Cross Cable share, but we are unlikely to become privy to those of course.  And those rumours, if they are to be believed, still have DoCoMo on the sidelines and there could yet be a Telecom tie-up there.

 

I read the articles on telcos in The Economist too Hugh and it made a strong point for specialisation and niche marketing in the industry.  This is obviously why Vodafone has done so well.  I have to agree that Telecom may have missed the boat in terms of gaining the highest buck if it had floated off subsidiaries early last year. 

 

One thing in Telecom's favour is that unlike its European counterparts it has not paid through the nose for 3G spectrum, although it has been caught in the downdraft of the incredible prices the Europeans paid.  Interesting to see Telstra yesterday playing down the importance of 3G - though the cynical side of me says Mr Switkowski may just be trying to feign disinterest to bring the price down.

 

It'll be great to get some solid news on the C&W Optus sell-off soon but I fear there will plenty of rumours to hit the mill before something definitive happens.

 

On the Telecom share price, it is interesting to note that at current prices Telecom has a P/E of 10.9 with Telstra at 22.8, and Telstra shares many similar challenges to Telecom - increased competition at home, expensive costs for growth overseas.

 

Cheers, Phil