Telco M&A responds to NBN landscape to boost revenue
Australian telecommunications merger and acquisition deals last
year were largely driven by an industry responding to the threats
and opportunities posed by the NBN. The remainder of 2015 will
likely see more consolidation in the sector as companies recognise
that it is the scaled providers who will prosper in an NBN
Here is a look at last year's telco deals and what that can
tell us about where the activity may be this year:
NBN Co: It is not every day an $11 billion deal
gets signed, but Telstra and NBN Co have now done their deal twice,
signing the new multi-technology-network-enabling contract in
mid-December after almost a year of negotiations.
One of the negotiating team said to me: "I've done this
contract twice now. I don't have another round in me."
Hopefully, too, for Australia this is the final version.
Also announced late last year were the separate deals between
NBN Co and Telstra and Optus enabling the use of the HFC networks
left stranded by the original NBN deal.
Telstra opens the purse: In an NBN world,
Telstra will procure wholesale fixed services from NBN Co after
progressively transferring ownership of Telstra's copper and
HFC assets. Telstra's acquisitions in 2014 illustrate that
Telstra is focused on customer experience and new revenue
On the customer service side, Telstra invested in
MountainView-based MATRIXX Software, a company which provides
customers with real-time data usage reports. The telco invested in
Nexmo, a company that assists with communication to customers and
Telstra also joined an investment round into US-based mobile phone
authentication services provider, Telesign.
Asian expansion was clearly on the agenda with the acquisition
of regional telco Pacnet for $858 million and Telstra is also
making an important strategic investment in the Indonesian market
via a joint venture with Telekom Indonesia.
Other revenue streams that Telstra invested in include three
acquisitions in the eHealth space and a joint venture with
Australia's largest home/business security monitoring company,
SMP Security. Telstra chief executive David Thodey has been focused
on the growth potential of its cloud computing business and
bolstered it during the year with the $60 million (rumoured)
acquisition of network integrator and advisory firm, O2
Telco buys tech: Telcos need to get up the
value chain from pure carriage provision, and consequently many are
looking to acquire IT services businesses.
ASX-listed broadband provider BigAir bought managed services
provider Oriel Technologies for up to $15 million. Inabox Group
bought IT and cloud services provider Annitel for $10 million and
iiNet bought 60 per cent of Tech2 Group, a provider of professional
technology services under various brands including Gizmo.
Datacentres heat up: Holder of some of the most
secure federal government files, Canberra Data Centres received
$140 million from Quadrant Private Equity for a 45 per cent stake.
While Vocus paid $11.7 million for ASG's Perth datacentre.Vocus
continued its consolidation play buying EDC's data centre
business earlier this month*.
The new contender: Vocus also made a
well-received bid to acquire west coast telco, Amcom for $635
million. This will create the nation's third largest provider
of corporate telecommunications when the deal is expected to be
approved in April.
ASX open for business: Hong Kong satellite
services firm, Speedcast, had iiNet founder Michael Malone join the
board and later in the year raised $150 million in an IPO on the
ASX. Meanwhile, shopping centre wifi player SkyFii raised $3.5
million in a backdoor listing.
2015: The Australian telco sector is in the
midst of big changes with the NBN coming on stream. Change creates
opportunity and we should expect this year to see Telstra get even
more aggressive in its onshore and offshore M&A strategy.
The junior telcos are likely to continue their consolidation as
will data centre providers. IT services companies with a cloud
focus can expect to see interest from the telcos as everyone seeks
to enhance their revenue streams beyond carriage.
*DISCLAIMER: The author worked on this transaction.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The issue of recording telephone calls was recently considered in the Federal Court in Furnari v Ziegert  FCA 1080.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).