Optus plots cable coup
By FINOLA BURKE
5jun99
FRESH from its failed bid for AAPT, Cable & Wireless Optus is
negotiating a bigger deal with US cable modem giant @Home, Bill
Gates's Microsoft and Kerry Packer's Publishing & Broadcasting.
It hopes to turn its $1.7 billion broadband cable into the country's
leading "intelligent" communications network.
If successful, the deal, which is still in early stages, would challenge
Telstra's position as Australia's leading broadband cable operator.
It would also have far-reaching effects for C&W Optus's business as it
takes high-speed Internet services, Web TV and video on demand
services into the home.
"We should have some sort of announcement in the next few weeks,"
one source close to the negotiations told The Weekend Australian
yesterday.
C&W Optus's hybrid fibre coaxial cable passes 2.2 million homes in
Sydney, Brisbane and Melbourne and is used for pay TV, telephony and
Internet services to around 220,000 homes. At the moment, it lags
Telstra's 400,000 or so pay TV customers.
But, if Bill Gates's recent predictions are right, the value of C&W
Optus's network would double with this deal.
There is also early thought being given to a possible partial float of the
cable network to give it currency to broker other deals. This could also
give C&W Optus an opportunity to unlock some of the value of its $1.7
billion investment in its cable.
C&W Optus chief executive Chris Anderson and his chief operating
officer Paul Donovan have been in negotiations with executives from
@Home and rival cable modem operator Roadrunner for several weeks.
@Home senior vice-president John O'Farrell and Roadrunner senior
executive Bob Rusak have been leading discussions for their companies.
Roadrunner and @Home now share a common shareholder in AT&T and
are in the throes of merging their businesses.
@Home is also partly owned by Microsoft, which has joined the
negotiations with C&W Optus to discuss putting local Internet, news
and video services on the new digital cable modem service.
PBL chairman James Packer, his online lieutenant Daniel Petre, who
chairs ecorp, and Microsoft executives have joined the negotiations
recently as the talks turned to local content needs.
Ecorp is in joint venture with Microsoft in ninemsn, Australia's most
popular Web site.
Brokers Ord Minnett are advising C&W Optus.
The preliminary idea is that @Home would take over C&W Optus's cable
modem rollout and partner it in the expansion of its network past its
current audience reach of 2.2 million homes.
The deal would give @Home and Roadrunner exclusive rights to the
cable to provide their high-speed Internet connections.
Their services give Internet users access to speeds up to 100 times
faster than conventional dial-up telephone connections.
A restart of the broadband cable rollout would also be likely as part of
the deal.
However, it is understood that C&W Optus may seek to avoid the
problems of its overhead cables and move to a more costly underground
cable rollout using the expertise of its new partners. |
