Telstra sells out of CSL

One thing we can say for certain about Telstra’s exit from CSL: that’s the last foreign-controlled telco we will see on Chinese soil.

Telstra’s 76% stake in CSL not only seemed an anomaly in Hong Kong, it seemed anomalous to Telstra. The business fell into its hands as part of the disastrous Reach JV back in 2001 as Richard Li threw assets overboard to stay afloat. 

Unlike Telenor or SingTel, Telstra never made any serious attempt to build offshore mobile business group. Now, on its umpteenth global strategy, it’s focusing on the enterprise/cloud/managed services market. CSL remains the odd man out.

The sale price of $2.43bn (A$2.73bn) is well down on the A$4 billion it paid back in the day, though it represents a A$600mn profit on the marked-down book value.

The other, more striking point in this is HKT’s offer to surrender all of its 3G spectrum in 2016. That includes its own 2x15MHz as well as that of CSL.

HKT says it can do that because it now has access to sub-1GHz frequencies, including 850 MHz and 900 MHz, as well as 1.8 GHz, 2.1 GHz and 2.6 GHz. Additionally, it says it will no longer have to pay the accompanying spectrum fees.

This comes hard on the heels of Ofca's unpopular (with operators at least) instruction that Hong Kong operators to surrender a third of their 3G spectrum for re-auction in 2016.

Whatever the reason, this generosity, surely a first in the history of mobile, does a favour both to Ofca and in particular China Mobile by ensuring a discount on the auction price. Happy Christmas to both of them. 

MAE: Back to the network

If there were one thing Asia's telco leaders agreed on this morning, it's that the network matters.

“All networks are not built the same,” declared Telstra CEO David Thodey at the Mobile Asia Expo keynote.

China Mobile boss Xi Guohua, saddled with the world's most unloved 3G network, readily agreed.

“Infrastructure is still a core competency of operators,” Xi said. “How can we satisfy the needs of consumers? By building the next generation network."

KT's Suk Chae Lee said he was trying to squeeze out network costs by going all-IP, warning that internet firms were now potential network rivals.

“In the old fixed broadband era, telcos were the only network builders and the cost of building a network was not an issue. However, in the new era, competitors like Google and even Amazon are building their own infrastructure, optimised for delivery of content with software-defined architecture.”

Xi and Thodey agreed that pricing would depend on service quality, in turn a function of the network functionality and investment. “[Consumers] will not be happy just with basic service we provide. This is both a challenge and an opportunity for traditional carriers,” Xi said.

But Thodey said the entire customer experience, from the website to the retail store, was critical.

“It's a serious issue. There's such a demand for service I think we are not creating enough value. Are we doing well and are we creating customer loyalty, or are we just doing the basics?”

Telstra, Vodafone do a deal

Faced with a situation of ‘get big or get out’ Telstra has sold its New Zealand fixed and mobile subsidiary TelstraClear to Vodafone New Zealand for NZ$840 million ($665.8m).

It's not a huge deal, but as well as giving Vodafone the scale to compete with Telecom New Zealand, it offers a couple of points of interest.

One is it is an echo of Vodafone's acquisition of Cable & Wireless Worldwide. Vodafone NZ gets a fixed-line network that will help cut data costs, as well as access to TelstraClear's strong list of trans-Tasman corporate customers.

For Telstra, the transactions adds to its pile of cash. While it will return NZ$490 million to shareholders via a pre-completion dividend, that leaves another NZ$350m ($277m)in search of a deal.

It also underlines the thinness of Telstra's offshore business, which these days apart from POPs and submarine cable assets comprises just CSL in Hong Kong and a clutch of Chinese internet and mobile VAS providers.

Ovum research director David Kennedy says there's not much M&A available right now. "That money's going be burning a hole in its pocket," he says.

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