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SP Telemedia sees Comindico as a bargain

SP Telemedia has emerged as the winning bidder for wholesale network provider Comindico. which was recently placed into receivership by its secured creditor, Cisco.

SP Telemedia has emerged as the winning bidder for wholesale network provider Comindico. which was recently placed into receivership by its secured creditor, Cisco.

Newcastle-headquartered SP Telemedia today announced to the Australian Stock Exchange that it had reached an agreement with Comindico's appointed receivers, McGrath Nicol, to purchase the wholesale network provider's business and assets.

While neither McGrath Nicol nor SP Telemedia disclosed financial details of the deal, the regional telecommunications company claimed it had picked up Comindico's IP-based converged network "at a fraction of its original construction cost".

SP Telemedia said that the acquisition would allow it to increase its presence in capital cities and add new dial-up, broadband and voice services to its existing product line.

SP Telemedia, like Comindico, is a Cisco customer. Both companies use Cisco's network technology platform to carry voice, video and data over IP.

Cisco used its rights as secured creditor to place Comindico into receivership late September, bringing the wholesale network provider's four year struggle, and its investment run pushing AU$370 million, to an end.

It's understood that Cisco, owed AU$80 million from a AU$175 million vendor financing arrangement with Comindico, put aside terms of a two-year agreement that would have seen it take a 15 percent equity stake in the network provider when it placed the company into receivership.

Under the deal Cisco was to be given AU$10 million of AU$27 million in new capital invested in the company by JP Morgan and B-Digital. Cisco was to be given its stake in exchange for retiring the remaining AU$70 million debt.

However, at the time, sources close to the deal said that Cisco declined to provide B-Digital with "certain assurances" and the deal fell apart.