Telecom New Zealand should consider itself lucky it didn’t buy failed Australian telco One.Tel, which collapsed last week owing millions of dollars.
A number of Australian newspapers reported Telecom was talking with One.Tel over buying its cellular network. That was before Telecom tried to buy Cable & Wireless Optus - that company eventually went to SingTel in a multi-billion dollar deal.
Telecom has since signed an agreement with Hutchison for its future 3G growth.
One.Tel was building a GSM network, similar to Vodafone New Zealand’s, and telecommunication analyst Paul Budde says this is indicative of Telecom’s piecemeal approach to the Australian market.
“They might be able to pick it up now for a bargain, but that’s really not a strong business case - they need to work out what their business model will be over here and not just leap into a deal.”
Budde, who has been critical of Telecom’s moves into Australia in the past, says Telecom doesn’t appear to have a cohesive plan and that’s upsetting to shareholders.
“One.Tel has a GSM network yet Telecom is building a CDMA network in New Zealand so there’s no synergy there.” Budde was also critical of One.Tel building its own network, to the tune of over $A1 billion, instead of leasing space on one of the existing networks. AAPT, the wholly owned Telecom subsidiary, was also building its own network on the CDMA platform, but Telecom ordered work on that to cease earlier this year.
Whether Telecom can pick up One.Tel in a fire sale is another question - Budde says there are already signs that other telcos are in the hunt for its client base.