I was recently asked by a newspaper in Atlanta (USA) to comment on the activities of BellSouth Down Under. I would also like to share my thoughts on this with you.
My reading of the situation is that BellSouth initially entered the New Zealand and Australian markets to learn about deregulation and doing business in a competitive environment. I don’t think that they ever had long-term plans to maintain their businesses here. Even if they initially did have such plans these quickly changed as the dynamics of the global market, as well as the American market, changed dramatically in the mid-1990s. Better opportunities became available elsewhere around the globe, the new Act created a more inward-looking focus amongst all the American carriers and they also stayed closer to home. This was demonstrated by an increase in business activities in Latin America.
Back to Down Under: During the mid-1990s BellSouth neglected their operation in NZ. There was very little growth in their business and they never challenged the incumbent Telecom New Zealand in a big way. There were lots of complaints from the industry and from business customers along those lines.
This attitude only started to change in late 1996, early 1997 – I believe when the company had made the decision to sell. In order to get some reasonable money for it they would have to lift their game and so they did. There was a dramatic increase in the number of innovative products, they introduced more competitive prices and the business really started to take off.
However, the fact remains that New Zealand is a very small country and that business opportunities, especially for large-scale operations such as BellSouth, will always be small fry. It is a parochial market and this is reflected in the current selling activities.
BellSouth activities in Australia were slightly different. Their stake in Optus Communications also meant their involvement in fixed line operations and a Full Services Network. This last activity especially created a lot of problems which needed to be solved and my opinion is that in the end this was all a bit too far from home.
The daily problems, both technically and in a competitive/regulatory sense, were quite overwhelming and a far more deeper involvement would be required. In the end it was the other partner, Cable & Wireless, who chose to become more hands-on involved and bought out BellSouth’s 25% shareholding.
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