Optus swoop good news for SingTel

One.Tel's customers are now under siege from larger competitors

By CNN's Grant Holloway

SYDNEY, Australia (CNN) -- In a welcome boost to Singapore Telecommunications, its Australian takeover target Optus looks set to snare up to 250,000 new mobile phone customers in one quick swoop.

Optus is approaching the customers of failed phone company One.Tel who are billed by One.Tel but actually use the Optus mobile phone network through a resale deal.

Each of these 250,000 users will be offered to switch to an Optus-branded product or lose their service altogether.

Optus managing director for mobiles Paul O'Sullivan said in a statement it was essential the One.Tel customers responded to the Optus offer if they wished to remain connected and continue to use their existing mobile numbers.

However Australia's telecommunications ombudsman John Pinnock Friday warned One.Tel customers to take care in assessing any offers to move their contracts to other companies.

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He recommended customers get assurances in writing of what is being offered or to make written notes of any verbal offers.

O'Sullivan said One.Tel's insolvency had forced the decision to cease supplying the wholesale service to One.Tel.

"Because of One.Tel's inability to pay us for use of our network services, Optus has no option but to cease supply," he said.

Customers offered a 'lifeline'

But Optus did not wish to abandon the customers which was why "we are prepared to throw the One.Tel customers a lifeline".

Australia's largest telecoms supplier, Telstra, said Thursday it would continue to provide its wholesale service to One.Tel "at this time".

One.Tel, Australia's number four telecommunications provider, was placed under administration on Wednesday with debts of around $100 million. One.Tel had been supported to the tune of $460 million by media heirs Lachlan Murdoch and James Packer whose companies together own 41 percent of the company.

Likely boost to cashflow for Optus

Optus says it has no option but to cut off its service to One.Tel

If Optus picks up the bulk of the One.Tel customers, it could give the company an additional cashflow of more than $100,000 a day for a minimal marketing effort.

Optus already has 3.4 million mobile customers and is the number two player in Australia.

Singapore's largest company SingTel officially launched a $9 billion bid for Optus last month in a bid to create an Asia Pacific telecommunications company with the size and scale to compete effectively with the Japanese and Chinese industry giants.

At noon Friday shares in Optus were trading A1c higher at A$3.51 on the Australian Stock exchange while in Singapore SingTel's stock was S3c firmer at $S1.71.