Commander could be Telecom target

AAPT-PowerTel, an Australian subsidiary of Telecom, has hinted at interest in the troubled Commander Communications after predicting further consolidation in the industry over the next 18 months.

AAPT-PowerTel has boosted its alliance with Macquarie Telecom - in which it has a 10 per cent stake - after signing a three-year deal to provide $A100 million of services a year.

More than $A300 million has been wiped from Commander's market value since April, after the company shocked investors with three profit downgrades.

Yesterday AAPT-PowerTel's chief executive, Paul Broad, said he would "still look at them" should the opportunity arise, after admitting to examining Commander more than a year ago when he was boss of the stand-alone PowerTel.

But he emphasised that for "us to do something now would be a big ask" because of Commander's high debt levels and his primary focus on integrating AAPT and PowerTel.

"I think Commander is a great company," he said, adding that it was "very attractive" when PowerTel considered it.

Commander is a customer of AAPT-PowerTel.

Mr Broad said consolidation in the industry was a "certainty in some form" over the next 18 months but Telecom's Australian subsidiary was "very keen" to keep its strategic holdings in Macquarie Telecom and the West Australian telecom iiNet.

Commander shares rose A4.5c to A62.5c yesterday - from an all-time low of A46.5c on September 11.

Optus is also understood to have had talks with Commander in the past but it is believed unlikely that the country's second-largest telecom will be keen to revive the possibility of a takeover.

Industry observers believe the most likely outcome for Commander could be a break-up of its assets. If that happens, Optus could show interest in Commander's small-to-medium-enterprise distribution business.

Mr Broad said he had yet to talk to Telecom's new chief executive, Paul Reynolds, whose appointment starts today.

Australia has proved a costly battleground for Telecom but Mr Broad said the board had not indicated a change to its Australian operations.

"My discussions with the board have not changed. I think [Mr Reynolds] will be a great supporter - he comes here with a fresh set of eyes."

- © Fairfax NZ News