One.Tel's demise a boost for competitors

The administrator says it is "business as usual" for One.Tel

By CNN's Grant Holloway

SYDNEY, Australia (CNN) -- The demise of Australian mobile phone company One.Tel could provide a boost for its competitors, particularly for Australia's other major players Telstra, Cable & Wireless Optus and Vodafone.

One.Tel was put in the hands of administrators Wednesday morning after the board decided the junior telco was insolvent.

While the administrator says it's "business as usual" for One.Tel, the company's one-million plus customers are now up for grabs.

The big three players dominate the Australian mobile phone market, which numbers close to 11 million subscribers.

Profits hurt by discounting

But profitability has been hampered by vigorous price competition. The effective removal of a key player from the price-discounting game could ease some of that revenue pressure.

Another pressure has been the large number of pre-paid mobile customers in the market, representing nearly all the new growth of the past year. These customers, often teenagers, are low-spenders but are expensive to service compared with more lucrative corporate customers.

Leading Australian telecommunications analyst Paul Budde says the One.Tel collapse will probably lead to higher prices as the number of Australian players continues to contract.

"There is now one less competitor, with the number four operator effectively out of the market.This means Telstra will get stronger and stronger … they are already putting up prices," Budde told CNN.

Others 'on the brink of collapse'

The situation would continue to deteriorate with a number of other Australian telecommunications companies also on the brink of collapse, he said.

"This is a sad story. We will have maybe seven players left by the end of the year, maybe only three or four by the end of next year."

Budde said companies such as Telstra and Optus would get stronger as they picked up One.Tel's most lucrative customers, leaving only the poor performers for the administrators to sell off.

"Everyone is on the rampage. A lot of One.Tel's customers were already fed-up with the poor billing services and other problems," Budde said. "Today would be the last straw."