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Uniti gains ACCC approval to operate on functionally separate basis

Company also in a bidding war to acquire the greenfields fibre company Opticomm.
Written by Campbell Kwan, Contributor

Uniti has gained approval to operate on a functionally separate basis after receiving the nod from the Australian Competition and Consumer Commission (ACCC).

The ACCC made its decision after conducting a public review process, Uniti said.

Since August, following amendments to the Telecommunications Act 1997, network owners have been allowed to apply for an undertaking that enables superfast fixed-line broadband networks serving residential customers to operate on a functionally separated basis. 

Previously, network owners were only allowed to operate on a structurally separated basis.

With the approval, Uniti is the first superfast broadband network owner to operate as both a wholesale and retail provider since the amendments.

The amendment was touted by the Australian government as being an attempt to create new commercial opportunities for providers and encourage them to invest and compete to offer better services for consumers.

According to Uniti, functional separation will enable it to actively promote its retail brands to around 110,000 connected premises nationwide and an additional 44,000 premises that are currently under construction when they become connected. 

"Being able to drive greater activation on its owned networks allows us the opportunity to secure both the retail and wholesale revenues, from each connected port, which is expected to deliver material incremental earnings to Uniti in the future," Uniti said. 

The terms of the undertaking will be for an initial period of 10 years.

Separately, Uniti is currently in the midst of a bidding war against Aware Super to acquire greenfields fibre company Opticomm.

Uniti currently has the highest bid, with an offer that values Opticomm at AU$6.67 per share. This consists of AU$5.20 cash for each OptiComm shares, including a fully franked special dividend of AU$0.10 per share, and 1.07 Uniti shares per OptiComm share.

Opitcomm's directors have unanimously recommended that the company's shareholders vote in favour of Uniti's latest offer unless a better proposal arises. Shareholders will be able to vote on whether to approve the deal on November 4, and should the plan proceed, it will be implemented on November 20.

Since June, Opticomm has attracted a bevvy of offers from the two bidders. Uniti placed the initial offer, which set Opticomm's price at AU$5.20 per share or an enterprise value of around AU$560 million.

Two months later, Aware Super put its hat in the ring, placing a takeover offer of AU$5.85 per share.   

Uniti then amended its takeover offer a week later, increasing its bid to AU$5.85 per share for all of Opticomm's shares other than the ones it already owns. This offer comprised of AU$4.835 in cash per share and 0.8 Uniti shares per Opticomm share.

Aware Super remained at the bidding table, however, sending another proposal that raised the price to AU$6.50 per share on October 12. This was then shortly re-upped by Uniti's current offer.  

Both Uniti and Opticomm focus primarily on providing fibre broadband connections to greenfields housing developments across Australia.

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