Speculation rife over Macquarie FTTN bid

Speculation rife over Macquarie FTTN bid

Summary: Macquarie bank has refused to comment on repeated claims that it is preparing to bid for the national fibre-to-the-node (FTTN) network, as observers fete the possibility of another contender entering the race.

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Macquarie bank has refused to comment on repeated claims that it is preparing to bid for the national fibre-to-the-node (FTTN) network, as observers féte the possibility of another contender entering the race.

A spokesperson for the Australian investment giant refused to confirm or deny claims that Macquarie is preparing to lodge a bid for the network, after The Australian reported this morning that the bank is readying itself to enter into the tender process.

Despite this, observers have encouraged any potential move by Macquarie to enter a stand-alone bid for construction of the network, saying a new entrant would boost the competitive health of the process.

"When their [Macquarie's] proposal is in motion it will potentially challenge the others on the economic model that is being touted at present," said Guy Cranswick, advisor at research firm IBRS.

According to Cranswick, the bank "certainly has the capability to make it work financially", but would need to partner with another company to build the network.

"What we have at the moment is lots of noise, who is partnering with whom, or going alone ... as the deadline approaches the pressure will build and perhaps some unforeseen partnerships will happen," he said.

Managing director of the Australian Telecommunications Users Group, Rosemary Sinclair, believes that "If Macquarie was to wind up with the tender that would enable a structural separation driven by the financials rather than regulation," she said.

Sinclair also claimed that a contract win for Macquarie or "any other infrastructure company" would likely drive down prices compared to those of an incumbent Telstra network.

"One of the difficulties of a Telstra build is that they'd be trying to preserve the kinds of margins they've enjoyed with their common network-based services, such as fixed-line voice ... the margins from that part of the business are very generous," she said.

"Macquarie would not have that legacy to sustain; like any other third-party infrastructure builder, its mindset would be different to that of an incumbent network owner/operator," said Sinclair.

Topics: Broadband, Government AU, Networking, Telcos, Telstra, NBN

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9 comments
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  • Investment bank = profits and only profits

    Telstra offered to build and fully fund a FTTN network in metro areas in 2005. If agreed, it would now be all but done.

    But no, because Telstra actually wanted to make a return on investment a few bleeding hearts, being coaxed by Telstra's leeching competitors enjoying regulated ULL/LSS access, stymied it.

    Lol, if an investment bank ever gains control, then these same bleeding hearts will truly find out that the almighty $ comes first and be begging for Telstra to return!
    anonymous
  • The bank will bite. And hard.

    SJT. As a sane and sensible person can you explain to me how ( if as Telstra haters claim) that Telstra is an overcharging, profit hungry, consumer eating 800 pound gorilla why it can't even afford to pay reasonable share-holder dividends out of its profits. And in fact has to borrow to so pay.

    You are correct, if an investment bank were to gain control of the Australia's NBN there would be much crying and gnashing of teeth from the very people who now criticize Telstra with such venom.
    anonymous
  • Maquarie Bank

    For major infrastructure projects (ie long term business case) their profit targets will be closer to 8 or 9% on capitol. This is much less than Tesltra's 18% target. Also, they understand customer service and will do a better job delivering SLGs.
    anonymous
  • Wholesale provider

    The capital needed for this with Macquarie will be based on not just rolling out a bunch of fibre but also developing a service arm to keep this functional. 8-9% will be on a much higher cost basis due to the huge investment needed just to support the network. At least an existing company already has support structures in place and will not need to invest a huge amount in establishing the back end support structure.
    anonymous
  • Not of our concern

    If the end result is going to be lower prices for us (i.e. consumers) then it's not of our concern even if additional capital is required to "support the network", it's the bidders problem.
    anonymous
  • Telstra == profits and lining the pockets of the Amigos Haaaaribbah!

    Anyone who thinks that Macquarie Bank's business agenda is any different to that of any other bidder is kidding only themselves.

    SJT: Do you honestly think that Telstra's motives are any less than making a killing and wanting to be dominant?

    If not then you should be able to cure your tunnel vision at http://bigpond.com/ and following the links to their plan pricing.
    anonymous
  • Sydney Tunnells

    Just ask Sydneysiders what that think about Macquarie and their venture into building Tunnells and what that they charge!!!

    Banks are most definitely after a bargain!!
    anonymous
  • Another opinion

    I'm a regular consumer, and also a worker in the IT industry, and also currently in the telecoms industry (at a Telstra Business Dealer, oooooh :) ). No stocks, no real obligations to anyone, no hiden agendas.

    This is what I am hoping for:

    Metro/regional area, FTTN to start with - FTTH eventually, preferably at once, but can be upgraded later if budgets are too tight. This is to supplement the current copper ADSL network, NOT to replace it (at least not straight away) - if anyone cuts the copper pairs going into my house and demands I use VoIP and VDSL2+ or bust, I'll be spitting chips. If I can't afford to upgrade, leave me to my ADSL over PSTN until it becomes comparable.

    Remote/rural - I honestly don't know, fibre's unfeasible for all but major rural centres but WiMax hasn't convinced me yet. But they should receive metro-comparable speeds AND prices.

    As long as these demands are met, I don't care whose name is on the "Built by..." stickers at the exchanges. I don't dout Telstra's ability to build a world-class network - state-funded or not, the pace of the rollout and specs of the NextG network is up there with the world's best. I would love to see a return to the Telecom glory days, when Commander products were designed here in our own design labs, and Brisbane was the location of the world's first ever commercial fibre link (Singapore and the US came looking here for help! Fancy that!).

    But the new network must have one thing and one thing only - open and equal access to all. Ideally, the network would be state-owned, and all providers, including Telstra, would pay equal wholesale pricing for it. The builder of the network can't be given an uncompetitive priviledge over it, like Telstra controlling ADSL2+ access by banning access to the DSLAMs until only after they get in first.

    This may sound expensive, and it probably will be. But personally, I don't care. I'd happily give my new tax cut back if it meant fibre for all.
    anonymous
  • Making money - brilliant!

    Here's a novel thought, I think Telstra wish to make money, just as any other of the potential bidders do too - wow, perhaps I should be Treasurer LW!

    Thing is, with all the political pressure on Telstra they will always provide to rural areas, (whether they actually want to or not) whereas an investment bank will (like the banks previously) cut their loses in unprofitable areas and bail, as soon as they can!
    anonymous