Clear serious about its fashionably late mobile bid

By Rob Hosking

Friday 27th October 2000

Peter Kaliaropoulos

Clear Communications' bid in the government's spectrum auction may be late but it is a determined one.

The company had kept out of the auction and had until now seemed uninterested.

It was widely assumed that Clear's owner, British Telecom, having pumped more than $200 million into Clear in the current year alone, would be reluctant to put any more funds into the firm, particularly as BT is widely perceived to be suffering from global over-reach elsewhere.

But within a couple of weeks of taking over Clear, new chief executive Peter Kaliaropoulos was taking a business case to BT to back it to bid in the auction.

"BT has signalled that, around the world, it wants to be a leader in broadband, IP and wireless, and we're part of that global strategy," he said.

"And Clear, as a company, can't afford not to play in the high growth market areas."

If the bids in the auction - which have been much lower than the breathtaking heights in some other countries - went too high then Clear would re-evaluate, he said.

Clear would be looking to break even on a mobile network after four years, he said - "anything beyond four years is a really tough call to make on shareholders." But such networks tended to keep growing for 10 to 15 years.

"I always look back to the GSM auctions a few years ago. A lot of people said it would not fly but it did. And the same will apply in the 3G network area - so long as those up-front licence fees [from the spectrum auction] are reasonable."

The massive prices paid around the world in some auctions have led to a re-evaluation of telco stocks by sceptical shareholders and is the main reason shares in carriers are not popular at present.

Clear still relies on a fibre optic network, although its wireless LMDS network was launched a couple of months ago.

"We're moving from an almost 100% fixed network, to a point where it could be 60% fixed, 40% wireless," Mr Kaliaropoulos said.

The industry was on the verge of another major shift to wireless and mobile voice and internet, he said.

Clear moved over the past 18 months, under former chief executive Tim Cullinane, from being a toll bypass operator to being an online services company, and that had been a massive transition, he said. The wireless LMDS network being set up provided quicker access to customers for data and voice than would be provided by laying extra cable.

While tolls would always be part of the Clear business "that's where we were born" - it was not where the main growth was now.

Mr Kaliaropoulos would not comment on whether Clear was part of the BT "fire sale" of assets was earlier this week. BT - with debts of more than $100 billion - is understood to be divesting itself of some of its international holdings.

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