June 19, 1992

Article at Reuters

Optus aims at 25 per cent of Australian phone market

By Wilson da Silva

SYDNEY – International consortium Optus Communications Pty Ltd, which this week launched Australia’s second mobile telephone service, said it expects to capture 30 to 35 per cent of portable phone business in the country’s newly liberalised telecommunications market.

“We’d expect 20 to 25 per cent of the market overall,” said Optus spokesman Leighton Farrell.

Some analysts say Optus is being conservative and could grab a much larger slice of an annual market estimated at Australian $9 billion.

Optus is led by BellSouth Corp of the U.S. and Britain’s Cable and Wireless Plc, with 24.5 per cent each, and local transport and security group Mayne Nickless Ltd with around 20 per cent.

Local interests, such as Mayne and several institutions, will hold 51 per cent of Optus through a holding company to be listed in Australia late next year. Mayne has said it plans to sell down its stake once the holding company is listed.

Australia is Asia’s most advanced telephone market, with more mobile and fixed telephones per capita than Japan, and is one of the fastest-growing, Optus officials say.

Demand for mobile phones in Australia is rising 22 per cent a year, and 430,000 phones launch about one million calls daily.

The telecommunications market had long been the domain of two state monopolies, which have since been merged into the Australian and Overseas Telecommunications Corp (AOTC).

The market was opened to a second competitor in November and will be fully opened from 1997. Analysts expect a rush of foreign interest and say AOTC will have a fight on its hands.

“It thinks Optus will easily achieve (its target), a lot of potential users are waiting to see what it has to offer,” said Len Rust of research firm IDC Australia.

“But Optus will have to deliver on price, service and quality if it wants to win,” Rust said.

Optus plans to spend A$4 billion in its first five years and lay 250,000 km of optical fibre cable to connect Australia’s major cities. In August, China will launch the first of Optus’ new generation of satellites, allowing Optus to run the world’s first satellite mobile phone service from 1993.

The technology was developed by Aussat Pty Ltd, which Optus bought from the government as part of the A$800 million deal for its telephone licence. Optus says the technology is a year ahead of what foreign carriers possess.

The system will allow mobile voice and high-speed data calls to and from anywhere in Australia or its seas, using only a hand-held device and a dish the size of a dinner plate, Optus said.

Optus says it wants to use Australia as a base to tap Asia’s estimated $70 billion telecommunications market.

With partners Digital Equipment Corp of the U.S., Japan’s Fujitsu Ltd, Canada’s Northern Telecom and Oy Nokia AB of Finland, it plans to spend A$400 million on research and build an export business worth A$10 billion a year by the year 2000.

Analysts say the Asia-Pacific region accounts for almost a third of world communications equipment sales, and investment is forecast to grow at 6.7 per cent a year in the 1990s – faster than Europe’s 4.4 per cent of North America’s 2.8.

Optus’s satellites will also carry four channels of pay television, and its optical fibre network – which will run parallel to AOTC’s – will be capable of carrying cable television and other high-grade communications.