Telecommunications Deals May Prove a Boon to WA

June 7th, 2001 Business News, Tech, Tech Features

By now we’ve all heard about the bidding war that took place over Cable & Wireless Optus between Singtel and Vodafone.

It was poetic justice of a sort since Singtel lost out on Australia’s third mobile phone carrier license to Vodafone almost ten years ago.

After paying $17 billion for the company, which they valued at $20bn including debts, Singtel announced early that they would still operate all Optus’ businesses — including local and long distance phone calls, the mobile phone network and pay TV.

But it’s early days yet and nobody expected Singtel to rock the boat before finding their feet in the Australian market.

How will this affect us in the west?

There are already moves that will bring huge data bandwidth into Australia. A proposed joint venture between C&W Optus, Singtel and Telecom New Zealand will see the creation of a new telecommunications pipe between Singapore and Sydney. The cable is planned to go through Jakarta and Perth.

In theory, Perth, as a significant point of entry into Australia for a new data cable, would benefit, as almost all of our data comes via Sydney. Singtel may provide the first step towards making the true connection to Asia that businesspeople and politicians past envisioned — a connection that could be the first step in making us technologically independent of the eastern states.

But how — if at all — will it affect users and providers?

Nick Morgan, New Media Director of a Perth advertising agency and of Internet dance music radio station Pump 100, is positive about the possibility.

‘Singtel’s our primary supplier anyway,’ he says, ‘and we’ve had fine service from them so far.’

Asked about the sort of content he provides, Nick is pleased at the promise of a closer link between countries via the merger. ‘We could always do with more stable networks. As a streaming audio provider the site is very bandwidth intensive. Now we have the possibility that everyone won’t have to come via Sydney.’

But should we all be worried about yet another large overseas company taking over a local? ‘It’s a positive thing if Singtel has the best for Australia in mind,’ he says, ‘but if they start sacking people and shutting down services it’s a bit of a worry.’

Simon Ehrenfeld, CEO, Eftel networks, sees both sides of the coin. ‘There’s a potential negative impact,’ he says, ‘it will depend on the costs of services and whether they pass on the savings they make. It will basically mean there’s one less competitor in the market. Maybe as a combined group they can justify more presence in WA, but both companies are guilty of having an eastern states focus.’

So far, as Simon points out, C&W Optus and Singtel are on a separate consumer-focus footing. While Optus are very much an end-user business, much of Singtel’s business occupies the next step up the service — provision ladder (similar to olden-days Telecom, up until deregulation).

‘It depends on what their agenda is to retail,’ he says, ‘in wholesale, which is what ISPs and content providers buy, people care about price and reliability.’

And the foreign ownership question? Simon points out a seldom-considered point in the debate — that plenty of capital flows the other way. He cites the recent attempted acquisition of a Tasmanian ISP by Eftel that was resisted by local shareholders. The deal was sealed when Eftel proved to users they’d provide a better service.

‘We see ourselves doing overseas telco investments,’ he says, ‘and we wouldn’t like to be restricted by things like that.’


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