Telstra bosses debate what to do with Clear

By Rob Hosking

Friday 25th January 2002

Executives for the newly formed TelstraClear were meeting this week to discuss the next phase of the post-merger shakedown.

New chief executive Rosemary Howard has already announced the top layer of the management team of the new carrier, formed from TelstraSaturn and Clear Communications in December.

The makeup of the next management layer is now being discussed with staff. This next phase, which will include decisions on where the company's head office will be located, will take place over the next six weeks, company spokesman Quentin Bright said.

Late last year Mrs Howard announced the first layer for the new management team, which was dominated by ex-Clear managers. There is widespread belief the next layer will show a similar tilt. This would appear to indicate the company's head office will be in Auckland, at Clear's eye-catching premise at Smales Farm in Milford, rather than at Telstra Saturn's waterfront home on Wellington's wharf.

However, Mr Bright said that wherever the head office is finally located, the company's top brass would, in any case, be spread around the three main centres.

The newly merged entity serves more than 300,000 business and residential customers in the three main centres, and also in the main provincial centres.

The next big growth area in the telecommunications market - in this country anyway - will be supplying broadband services to the bigger small and medium-sized businesses, ABN-Amro telecommunications analyst Jeremy Simpson said.

Most of the larger corporates have made their big investment in broadband technologies. However, while the larger SMEs are a rich growth prospect, the broadband services they are most likely to want - DSL services down the existing copper network - is supplied by Telecom.

Clear had a wholesale agreement with Telecom to re-sell those services and that agreement presumably still holds.

"The key issue for TelstraClear will be gaining a good share of the business market and that larger SME market in particular," Mr Simpson said.

"But to do that they are going to have to be able to access DSL services at a competitive wholesale rate, and we've yet to see whether the existing agreement with Telecom will provide that."

The other key development area is in delivery of mobile services - and here, too, the incumbent may have an advantage over the newcomer. Both TelstraSaturn and Clear had separate resale agreements with mobile provider Vodafone, but do not have their own networks, although both have bought spectrum for the next generation of mobile products.

Telecom, with its own mobile and fixed networks, is better able to offer bundled services to customers, one analyst said yesterday. The newly merged company, however, might be able to get a more flexible deal with Vodafone, he said.

Assets include Clear's fibre-optic backbone between the main centres, and TelstraClear's established network in Wellington and its partially completed Auckland and Christchurch networks.

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