The Australian government is planning to privatise the Australian & Overseas Telecommunications Corp if it wins the next election, according to the Australian Financial Review. Prime Minister Paul Keating is thought to be a driving force behind the plan, although he may still face some opposition from within his Labor Party: the government is publicly committed to keeping the phone company in state ownership, but senior officials within the party are concerned that the competition from Optus Communications Pty Ltd’s new long-distance service will lead to an erosion of the state company’s value. Yet to be decided is the exact form of the sale; Paul Keating is believed to favour a 100% sell-off, but the size of the company – valued at the equivalent of between $8,250m and $13,750m – would make this an unviable proposition. The more likely plan, therefore, is to sell it in parcels, which would raise around $2,750m in the first 18 months. Similarly, a plan to limit foreign ownership to 30% seems likely to be ditched as this could affect the price of the sale. Steve Wallage, Consultant with London-based Intelidata Ltd, believes the merger of Telecom Australia and the Overseas Telecommunications Corp which led to the formation of the new corporation last year, means that the company is in a good position to be sold off. He points out, however, that now may not be the best time to sell, since the US Baby Bells and long-distance carriers – which would otherwise make likely buyers – are facing a period of uncertainty following President-elect Clinton’s success in the US elections.

Pointer

More positively, he commented that a pointer to likely buyers could be gleaned from those companies that bids for Aussat Pty Ltd, Australia’s former loss-making satellite system. The government’s sale of this last year effectively opened the door to a second telecommunications carrier in Australia, resulting in Optus competing with Australian & Overseas. If the sale does go ahead, the two other bidders – Communications Satellite Corp, Washington, and Kalori Communications Ltd, a consortium currently led by Hutchison Telecom Ltd – must be seen as likely buyers. The Australian & Overseas Telecommunications Corp is to invest around $6m to establish a second telephone exchange in Phnom Penh, Cambodia. Its first exchange was set up in 1990, and the new facility will increase available international lines to 1,500 from 700. The move is part of a 10 year revenue sharing contract between Australian & Overseas and the Cambodian government, which plans 100,000 lines in Phnom Penh and a further 3,000 elsewhere by the year 2000.