THE bitter dispute that has erupted between AT & T and its former close ally in Hong Kong, Hutchison Telecommunications, is the result of changes in the long-term strategic focus of both firms. When the Hutchison AT & T Network Services (HANS) alliance was cemented in mid-1991 both were committed to policies of rapid and far-reaching expansion in their global reach. For its part, AT & T had shifted focus from its domestic US market - characterised by vast revenues and healthy margins tempered by limited growth potential - to building a global company. AT & T chairman Robert Allen declared in 1991 his ambition to build up revenues generated outside the United States, to account for more than 50 per cent, from less than 20 per cent, by the end of the decade. Hutchison Telecommunications, though obviously far smaller, had no less grand ambitions, committing to enormous telecommunications infrastructural investment in Britain and elsewhere - the firm was bidding for fixed network and mobile telephone licences in Australia, and was involved in various consortiums throughout Asia. In that heady environment the two firms were seemingly made for each other, with Hutchison's aggressive instincts and existing international telecom investments, particularly in Britain and Australia, making it a handsome prospect for AT & T, who saw thepotential of a partnership as both a supplier of network equipment and expertise, as well as a supplier of cash for equity. What should have been the start of a beautiful relationship in HANS ended before it really got started, largely it seems because of changes in management focus. Hutchison's initial telecommunications ambitions outside of its home market waned, despite the amazing and on-going investment in Britain, while AT & T's grew from the desire for international expansion to the desire for global domination. In between, of course, the Hutchison executives who had negotiated a royalty regime for the HANS partnership that was apparently extremely favourable to AT & T, had left. Hutchison Telecom's boss Rick Siemens and Hutchison Whampoa's Simon Murray had courted AT & T in the HANS deal seemingly safe in the knowledge that it was just the first platform of what would become a far bigger and certainly far more lucrative strategic relationship. Once Hutchison lost interest in pursuing the globe, the natural partnership was lost. For Hutchison's local ledger-watchers, the HANS royalty arrangement suddenly appeared, according to an insider, ''ridiculous''. For AT & T, its 49 per cent holding in the Hong Kong end of plans for global domination may have suddenly looked anaemic.
