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TPG: Don't worry, we're just like Optus

A spokesperson for Pipe Networks' potential new parent, SP Telemedia, has pointed to Optus as a prime example of how it can successfully operate a wholesale and retail telco.
Written by Liam Tung, Contributing Writer

A spokesperson for Pipe Networks' potential new owner, SP Telemedia, has pointed to Optus as a prime example of how it can successfully operate a wholesale and retail telco.

"If this deal goes through, we don't intend to reduce any of Pipe's wholesale business," a spokesperson told ZDNet.com.au this afternoon. The spokesperson said the comments were the views of chief David Teoh, however the executive was unable to conduct an interview.

"Much of its current business is already under long-term contract with Pipe's foundation and other customers. It's worth noting that organisations like Optus also operate both wholesale and retail arms and all of us in the telco industry buy some services from each other," the spokesperson said.

Some ISP chiefs, such as Netspace's Stuart Marburg, yesterday said the main concern would be that SP Telemedia may give TPG preferential pricing, ending the neutral arrangement the industry had become accustomed to. Another ISP boss said it would be a "disaster" while iiNet chief, Michael Malone, was less concerned.

According to the spokesperson SP Telemedia intends to operate Pipe as a separate business. "PIPE has an excellent wholesale and corporate business operation and we look forward to the opportunity to grow it."

The company claimed that TPG and Pipe will work very well together, and that both they were both "efficient, well-run, cost-conscious companies with excellent staff."

One analyst however has a different view of the two companies' networks and cultures. "I've seen [Teoh] a few times, but he's a pretty closed book," said Southern Cross telco analyst, Daniel Blair. "I don't like TPG's customer service proposition, and I'm a bit dubious about the network." However, he commended Teoh for generating lot of free cash and paying off huge debts.

While some shareholders have criticised the current offer for failing to include a sufficient takeover premium, the spokesperson defended the offer as "excellent", and that it "represents a share price higher than any closing price in Pipe's history."

That may be, however Pipe Networks' shareholder David Hall told ZDNet.com.au there simply wasn't a takeover premium while Pipe would be carrying a large portion of the profits for the would-be merged company.

Asked whether SP Telemedia was confident it would be able to retain Pipe Network's engineering-focussed headcount, the spokesperson pointed to its retention of Pipe's popular chief, Bevan Slattery.

"Our strategy would be to allow Pipe Networks to continue to operate as a focused business," said the spokesperson. "We are extremely pleased that Bevan Slattery has agreed to stay on as CEO."

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