TPG-Soul merger to create DSLAM behemoth

TPG-Soul merger to create DSLAM behemoth

Summary: SP Telemedia -- otherwise known as Soul -- has announced its plans to merge with TPG Internet in a further consolidation of the telco market which will create one of Australia's largest DSLAM footprints.

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TOPICS: Telcos, Networking, TPG
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A clarification was made to this story. Read below for details.

SP Telemedia -- otherwise known as Soul -- yesterday announced plans to merge with TPG Internet, which will create one of Australia's largest DSLAM footprints.

Soul hopes to buy TPG for AU$150 million in cash and 270 million shares, which at their closing price on 6 February (AU$0.35) amounts to AU$94.5 million. The deal will be complete in April if granted shareholder approval.

TPG has 238 DSLAMs, which will result in a combined Soul/TPG network of 303 DSLAMs compared with the 315 owned by Optus, 299 operated by AAPT/PowerTel/iiNet and 95 for NEC/Nextep.

Their combined customer base will total 700,000, with TPG and Soul bringing 200,000 and 500,000 to the table respectively. Soul has estimated the value of TPG's customers at AU$9 million for the 2008 financial year. Forecast revenue for the combined company this year is AU$469 million.

Cost benefits for the combined company will include the potential to migrate some of Soul's operations to TPG-owned Orchid operations in the Philippines, removing duplicated personnel and reducing capital expenditure on the DSLAM rollout, according to Soul.

"The merger of SP Telemedia and TPG will create one of Australia's largest and most profitable telecommunications companies with extensive owned network coverage for voice, video and data applications," chairman Robert Millner said in a statement.

The deal is likely to create a more competitive company, according to Ovum's research director David Kennedy.

"This reflects a trend towards consolidation in the broadband market," said Kennedy, who explained that although there would be fewer competitors, the competition would be tougher. "These entities will be looking to lower prices and make use of economies of scale," he added.

TPG was founded in 1986 when it sold computer equipment as well as network and Internet services, but dropped the computer component in 2005. Last April it became the parent company of listed Internet provider Chariot -- which has a market capitalisation of AU$9 million -- by acquiring a 70.25 percent shareholding.

Soul intends to offer for the rest of the Chariot shares if its shareholders approve the merger.

Clarification: The number of DSLAMs for AAPT/PowerTel/iiNet has been corrected to 299.

Topics: Telcos, Networking, TPG

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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8 comments
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  • Their Network???

    If I am not mistaken all their DSLAM's are in Telstra exchanges and they use the last mile of Telstra copper and backhaul services provided by Telstra, Optus etc.... like all other ISP's.

    I don't see any of the "national carriers" building new exchanges in the country to reduce the reliance ion Telstra infrastructure. I wonder why that is?? Could it be too expensive for them??

    I don't see anyone providing fibre to the home to remove the reliance on Telstra copper.
    anonymous
  • TPG-SOUL MERGER

    I for one will NOT stay here with TPG if that merger goes ahead,I've been ripped of by them for at least 2 years,you HAVE to watch every bill because if you dont,they will rip you of!!!
    so now with all that money they ripped you of with,there are going to try and buy TPG,yes i have all the bills to prove it!!!
    i'm still under contract with them,but if they can chance SO CAN I !!!!
    anonymous
  • Love the hype

    "TPG has 238 DSLAMs, which will result in a combined Soul/TPG network of 303 DSLAMs compared with the 315 owned by Optus, 95 operated by AAPT/Powernet/iiNet and 95 for NEC/Nextep." - That's a third of what Telstra just announced and less then half of what Telstra already have which they conveniently failed to mention. Also they failed to mention they are all focused in metro areas.

    "The merger of SP Telemedia and TPG will create one of Australia's largest and most profitable telecommunications companies..." with only half a dozen companies with a footprint in more then one city this places them in the top 6 and one of the most profitable ... hang on isn't this what people complain Telstra does ... make too much money?

    At least the industry consolidation has begun and soon I hope we will see a handful of large companies offering a competing national network using their own equipment instead of only building in the main cities and reselling Telstra everywhere else.
    anonymous
  • AAPT/PowerTEL/iiNet

    AAPT/PowerTel have 136 DSLAMs and iiNet has 188. THere is a network access agreement between AAPT/PowerTel and iiNet.

    AAPT/PowerTel/iiNet also have a cross network access agreement with Optus/XYZed.

    Together the AAPT/PowerTel/iiNet/Optus cross network access covers a significant number of the metropolitan areas around all the state capital cities and many of the major regional cities.

    Telstra has been upgrading their DSLAMs to ADSL2+ for over 2 years now. Mergers like this can only serve to create better competition through network cost reductions from economy of scale, etc.

    Good customer service is always an issue and I have seen many mergers result in woeful accounting practices. I don't like your chances Harry.
    anonymous
  • Poor Qualtiy

    Another typically poor quality article from zdnet. Is it really that difficult to correct errors such as "PowerNet". Obviously it's PowerTel. Any how about some informed research. AAPT and PowerTel should not be lumped in with iiNet, and together they have many more than 95 DSLAMS anyway.

    Please check your facts and your spelling zdnet!
    anonymous
  • DSLAM+ - what's the use if you're on Pair Gain/RIM

    There appears to be a total lack of interest - or is it knowledge - about the real problems of Internet connection - really lack of it - for those over a few Kms from any exchange at all in the your policy and city, regions or further... who cares about DSLAMs and ADSL 2+ if you are still on slow pair-gain and/or RIM limited dial up in the regions or even outer suburbs of our major cities..... We need the press, such as ZDNET, to really look at the forgotten - large - community of those with no broadband at all in our country.

    Seeing Prime Minister Rudd with Telstra's Trujillo recently "crowing" over ADSL2+ was just painful for those to whom the "announcement" was of no significance at all.

    Incidentally, those "Telstra Victims" of RIM/Pair gain only have access to the old Coonan "broadband guarantee" with the - wow - promise of 512Kbit/sec and 1 Gbyte download (itself ridiculous and a laughing stock practically anywhere overseas) via - good heavens - satellite for a minimum around $50 per month.

    Come on Minister Conroy - tell us just what is happening for us RIM/Pair Gain victims - Telstra, from my experience, could not care less about small businesses and homes in this situation. Waiting for Fibre to the Node/Home/Premises is a lifetime in Internet terms!

    We need a fast (speed and deployment) - albeit interim - solution for us "Telstra/Trujillo Victims" - will OPEL make it?? Who knows?
    anonymous
  • Error Corrected

    Thank you for pointing out the error, which has now been corrected. The DSLAM numbers come from Soul documents, and the companies are grouped as in those documents.
    anonymous
  • TPG-SOUL MERGER

    billing errors exist in most telco's which try to implement rocket science complexity in what should be a basic carriage service.

    all these mergers are bad for me :)..especially considering tpg was a relatively early adopter...

    is tpg selling out because of the FTTN network make's all the DSLAM redundant? Are the TPG owners smar/Soul guys crazy or am i wrong(have i got this FTTN/DSLAM redundancy issue wrong?) what do the experts think?
    anonymous