Aussie Broadband Players Expand Businesses

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Sydney, Australia-Even with growth in this country's pay TV market, the owners of Australia's hybrid fiber-coaxial cable networks are seeking new ways to wring revenue from their investments.

The new focus on broadband services also is testing some of the older pay TV alliances. At the forefront of this are the two owners of Australia's separate HFC-cable networks, Cable and Wireless Optus Ltd. (CWO) and Telstra Ltd.

CWO is looking to bring a new partner into its broadband business, with the intention of spinning that enterprise off in an initial public offering. The company owns a state-of-the-art HFC network that passes 2.1 million homes, its 200,000-subscriber Optus Television pay television service, the Optus@Home high-speed Internet service and Optus local telephone service.

According to local press reports, CWO has entered into a period of exclusive negotiations with Kerry Packer's Publishing and Broadcasting Ltd. (PBL) and Microsoft Corp. Those two companies are already equal partners in Australia's largest Internet portal, ninemsn, which is fed with content from PBL's two media arms, the Nine television network and Australian Consolidated Press magazines.

Sources close to PBL said an equity stake in CWO's broadband network would provide the media and computer-software partners with greater leverage into Australian homes and TV sets via ownership of the set-top box.

The piece of the puzzle that remains unclear is PBL's 25 percent stake in Optus' rival pay TV operator, Foxtel. In addition to PBL, the Foxtel partnership includes telco giant Telstra (also Optus' main telephony rival) and PBL competitor News Ltd.

Industry sources said the Foxtel partnership has been uneasy at best, as Telstra-which owns the broadband-cable-network infrastructure-has blocked Foxtel from becoming a more substantial player in the Internet and broadband arena.

A further threat to that partnership could be posted by the new alliance between Telstra and Pacific Century CyberWorks (PCCW), the new-media company fronted by Hong Kong mogul Richard Li, which was announced two weeks ago.

Under that $A20 billion ($US12 billion) transaction, Telstra will distribute PCCW's Network of the World broadband content and applications in Australia. Telstra will also invest $US3 billion in PCCW, and the two will create a jointly owned global Internet-protocol backbone company.

The deal is contingent on PCCW finalizing its acquisition of Hong Kong telco Cable and Wireless HKT Ltd.

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