Telstra's Woes Raise Queries Over Asian Ventures
SYDNEY, AUSTRALIA, Jun 14, 2001 (Newsbytes via COMTEX) -- After another
bruising day on the share market, plans by Australian telco Telstra [NYSE:TLS]
plans to extend its mobile reach deeper into Asia are looking more and more
inflated, observers say.
The telco, in conjunction with Hong Kong tycoon Richard Li's Pacific Century
CyberWorks' [NYSE:PCW] subsidiary Hongkong Telecom, has been tipped to make a
1.2 billion Australian dollars ($633.12 million) bid for Singapore's MobileOne
cellular operation next week.
Telstra had previously taken a stake worth around $2.64 billion in CyberWorks'
mobile operation.
Both acquisitions are intended to form part of Regional Wireless, a joint
venture with CyberWorks that aims to set up a pan-Asian mobile network. That
dream is now looking decidedly dusty and overpriced, observers say.
Despite the competitiveness of Asian mobile markets and shrinking margins,
Australian telecommunications industry commentator Paul Budde says Telstra would
be unlikely to pull back from the Singapore venture.
"They can't go right," he said Wednesday, "They either pay too much or they pull
out" - a course which would probably bring demands for compensation from
CyberWorks.
Budde said Telstra's insistence on pursuing Asian mobile markets is
"wrong-headed," and that broadband investment is the more sensible way ahead.
But the telco is unlikely to change course unless its accountants step in.
"Hopefully, the squeeze on finances will be so big they cannot afford it," said
Budde of Telstra's ambitious Asian plan.
He described Telstra's 5 billion Australian dollars ($2.64 billion) investment
in CyberWorks as the biggest of many "lemons" in its mobile investment history,
but predicted that it would soon be wiped from corporate memory: "In three to
four years, you won't hear of PCCW any more, the 5 billion dollars is just gone.
That's a typical scenario you see with Telstra."
Telstra shares closed at 5.69 Australian dollars, down 39 cents or 6.4 percent
on the Australian Stock Exchange (ASX). More than 112 million shares changed
hands.
Exchange Rate: $1 = 1.89 Australian dollars
By Dorothy Kennedy
Reported By Newsbytes.com, newsbytes.com .
Copyright 2001 The Washington Post Company
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