Australian telcos are plowing on with their original strategies despite their share prices following the market down to numbers some might consider to be a right bargain.
Share prices: Telcos hit (Credit:Suzanne Tindal/ZDNet.com.au )
"I don't see the pricing of the market as an issue," Ian
Martin, ABN Amro telecommunications equities analyst told
ZDNet.com.au. Consolidation of the telco industry, driven by
the costs of providing high speed broadband, has been happening for
some time, he said, and will not be sped by the market prices.
Instead, the spur for further market consolidation would be the
national broadband network, Martin said. "Once we know the form
and structure of the NBN, that's going to be a catalyst for
change," he said.
Until then, the market conditions, including a lack of available
equity, will stop any action, not increase it, Martin said. "I
think for the moment it's heads down, consolidate your cash."
Martin's view that the market price wouldn't drive
acquisitions was shared by industry players.
Internode was always looking to acquire companies which would slot well
into its make-up, according to a spokesperson for the company.
"Friday's share price changes don't change [Internode's]
interest, don't make it any more acute," they said.
In addition, the spokesperson said that price wasn't the
deciding factor for Internode, with some companies having bought
others and realised the integration would "cost and arm and a
leg". More important was that the acquired company complemented
Internode and was relatively straight forward to
We have no money to buy anybody and we're not thinking of
selling to anybody
Exetel CEO John Linton
iiNet chief technology officer Greg Bader said that the company had mentioned
publicly in the past that it was looking for acquisitions, but
would not elaborate.
"We have no money to buy anybody and we're not thinking of
selling to anybody," Exetel chief executive John Linton said. "We make a
profit and we're run very conservatively, so I don't think we'll
be screaming for the exits."
Soul Telecommunications, which has
recently bought TPG Internet, always has an appetite
for more, according to a spokesperson, and wouldn't be a target for others.
"We're not looking to be eaten up or gobbled up by anyone at
this stage," the spokesperson told ZDNet.com.au. He said that
although the company filed a loss in the last financial year due to
bad debt write-offs, things were going well, and the company
believed the pricing of its products would appeal to customers in a
Mobile provider 3 said its business model was based on four market players, but
would not comment further on any speculation. Optus said it did not
comment on merger and acquisition activity.
Telstra, AAPT, Amcom, Adam Internet, Engin, iPrimus, Netspace,
and People Telecom did not reply in time for publication.
The industry has already seen a lot of consolidation, according
to Kate McKenzie group managing director of Telstra's wholesale
division, speaking last week at the Ovum Future of Wholesale Telecoms event,
a phenomenon she blamed for a contraction of Telstra wholesale customer numbers.
"We've got 282 customers and shrinking," McKenzie said.
"If you'd asked me that question a couple of years ago it
would have been more like 400 customers."