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Topic # 103242 1-Jun-2012 23:42 Send private message

http://i.stuff.co.nz/business/industries/7026357/Breakup-buzz-in-Reynolds-wake

http://www.itnews.com.au/News/302038,the-new-zealand-telco-problem.aspx

"Telstra expected to have excess cash flow of A$2billion-to-$3b over the next three years, McCormick said. "Having ruled out share buybacks, this money is partly earmarked for acquisitions."


It's an interesting question, but would the OIO, the ACCC or government ever let that happen?

Or am I just dreaming?  If you'd asked me three decades ago if Australia would ever own "The Bank of New Zealand" then I'd have just laughed at you, but today Australian companies own all four of our big banks.

I can see a truck load of benefits for Telstra.  It would mean they just by the AAPT wholesale business back in Australia, would give them a controlling share of SCX and mean they'd own and control the line share of capacity to .us on 3 different cables and could much better dictate what everyone else pays for high speed access.  It would give them an ability to dominate the local mobile markets and give them a really really strong position to get what they want from Chorus with respect to UFB.

Would it be good for consumers? 

Well Telstra have just brought us 100/10 to 70,000 homes.  I'd like to know how the uptake compares to VDSL.  The price is right though.  For the same prices as Snaps VDSL I get 100 not 50 and it didn't cost me $400 for a modem and $400 for wiring and got done in less than two weeks.

I'll agree that $75/40/phone/data has been a disaster for TGA users in recent weeks and a few are suffering in other parts, but clearly it's a winning price point for consumers because clearly people dumped out dated plans all over and moved. 

TCL are still giving away T-Boxes which has to be keeping Sky in check to some degree and putting pressure on every other STB providers to put value in their offerings.  The T-Box is all geared up for some serious IP based TV offerings to come as well.  So clearly they have more plans for that kit on the radar and clearly their HFC network is being ramped up to deliver more content.

It used to be that TCL was the premium IP provider (or at least the providers that they bought) but it's clearly moved to a consumer provider getting back to being far more focused on delivering more value and bringing more value to New Zealanders than they've been getting.

So would a Telstra take over of Telecom be a good thing for New Zealanders?

Clearly in Australia, Australians have more data than New Zealanders.  I wonder if TCL's 40/75/Phone deal was the driver that pushed Telecom to actually, yet again, double data?

Yes, in the last two years TCL's profit has reported as crap.  $1m profit on $750m sales, that's not flash, but why?  Have they been quietly just stacking the deck ready to bring the sort of value they do deliver in Australia?






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  Reply # 634468 2-Jun-2012 00:04 Send private message

the main problem as I see it would be that if Telstra bought Telecom, then they would own ~70% of the market. (50% Telecom, ~20% Telstraclear). From a competition point of view that is a big no-no.

So unless Telstra sold Telstraclear first of all (maybe to Vodafone?) then they probably couldn't do it.



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  Reply # 634470 2-Jun-2012 00:11 Send private message

NonprayingMantis: the main problem as I see it would be that if Telstra bought Telecom, then they would own ~70% of the market. (50% Telecom, ~20% Telstraclear). From a competition point of view that is a big no-no.

So unless Telstra sold Telstraclear first of all (maybe to Vodafone?) then they probably couldn't do it.


Assuming they don't just spin out the fixed DSL business.

Telstra's direction is mobile.  It's where they make their money in Australia and they're getting out of layer 1 fixed line services in Australia.  They're going to become a layer 3 provider with the NBN.

However, they'd only control 70% of the fixed line retail market and that would really be a problem for Chorus to fix by simply making sure they deliver good deals to other providers.  Growing new customers in the market is already something Chorus are getting more focused on.

It could be a real driver for Chorus to get serious about investing in some international capacity and get us a new Australian link on the road as well.







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  Reply # 634471 2-Jun-2012 00:18 Send private message

DonGould: It's an interesting question, but would the OIO, the ACCC or government ever let that happen?

Or am I just dreaming?  If you'd asked me three decades ago if Australia would ever own "The Bank of New Zealand" then I'd have just laughed at you, but today Australian companies own all four of our big banks.

I can see a truck load of benefits for Telstra.  It would mean they just by the AAPT wholesale business back in Australia, would give them a controlling share of SCX and mean they'd own and control the line share of capacity to .us on 3 different cables and could much better dictate what everyone else pays for high speed access.  It would give them an ability to dominate the local mobile markets and give them a really really strong position to get what they want from Chorus with respect to UFB.


ACCC and ComCom wouldn't allow such a merger like this for that exact reason.  I also would say Telecom would object to spinning of individual parts.  For example, from what I understand AAPT would be fairly important for the Gen-I operations in Australia.

The difference is that there a 4 Australian banks that own 5 New Zealand banks, no real monopoly (expect maybe ANZ has a majority with ANZ + NBNZ brands)

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  Reply # 634473 2-Jun-2012 00:45 Send private message

I would have thought there would be more money it it for Telstra AU to buy up other Australian providers than Telecom NZ. Their UFB style program dwarfs ours and I'd imagine them wanting to sell high value , high speed services to a large audience.

Having said that who really knows what goes on behind closed doors with these industry heavy weights

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  Reply # 634482 2-Jun-2012 04:20 Send private message

If TCL were in the market here for anything... Id be betting on them chasing 2Degrees.

You,ve made some valid comments, but i think they would be looking to other [Asian?] markets with better growth potentials.

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  Reply # 634486 2-Jun-2012 07:19 Send private message

What a load of bollocks is all I can say.




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  Reply # 634487 2-Jun-2012 07:49 Send private message

Instead of "Telstra to buy Telecom" in the subject you should use "Will Telstra buy Telecom?".

You RTA, didn't you? It's speculation about what/how Telstra would make bigger investment in New Zealand - they don't say anywhere Telstra WILL buy Telecom, only that Telstra COULD buy Telecom. An option, not an assertion.




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  Reply # 634489 2-Jun-2012 07:50 Send private message

Would never be approved, and is not desirable.




Mike

 Interesting. You're afraid of insects and women. Ladybugs must render you catatonic.

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  Reply # 634520 2-Jun-2012 09:37 Send private message

More here.

http://www.techday.co.nz/netguide/news/nows-good-for-telstraclear-to-buy-a-mobile-ne/23865/1/

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  Reply # 634521 2-Jun-2012 09:38 Send private message

Yawn. Same thing we hear every few years.

I'd turn the question around and ask how serious Telstra actually are about the NZ market. Do they actually have any real interest here? If so why is TCL treated as a 2nd rate cousin that reveives no budget and yet has to deliver a return?

If Telstra wanted to invest serious money in NZ they could make a difference. Whether it would generate a ROI is another matter entirely. It's clear over the years that they'd consider this a waste, and have simply let the status quo remain.


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  Reply # 634544 2-Jun-2012 10:35 Send private message

** Stares ** **Blinks ** rubs eyes.

No, too early, nothing makes sense

Goes back to bed.

N



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  Reply # 634838 2-Jun-2012 22:12 Send private message

oxnsox: If TCL were in the market here for anything... Id be betting on them chasing 2Degrees.

You,ve made some valid comments, but i think they would be looking to other [Asian?] markets with better growth potentials.


2Degrees doesn't make sense to me.  It's not a national network and reliant on an agreement with Vodafone, who Telstra have already had one falling out with - TGA mobile build 2007.

Telstra got toasted in Asia with PPCW, the write downs were massive.

Telecom mobile is a fibre feed FTTN network, not a WTTN network, something that both TCL and T.au really understand well.

The fit makes more sense to me.

I'm not saying you're wrong, you may well be very very very right, but as yet I don't see it.

D





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  Reply # 634840 2-Jun-2012 22:13 Send private message

Talkiet: ** Stares ** **Blinks ** rubs eyes.

No, too early, nothing makes sense

Goes back to bed.

N


Is this a better time of day for you Neil?  btw... is that F for fail? ;)






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  Reply # 634844 2-Jun-2012 22:19 Send private message

NonprayingMantis: the main problem as I see it would be that if Telstra bought Telecom, then they would own ~70% of the market. (50% Telecom, ~20% Telstraclear). From a competition point of view that is a big no-no.

So unless Telstra sold Telstraclear first of all (maybe to Vodafone?) then they probably couldn't do it.


I assume you're talking about the fixed data market and not TelstraClear having 20% of the mobile market.

With layer 2 now spun into Chorus, I don't actually see a 70% starting point in the fixed market being a problem.  Telecom started with 100% and controlled layer 1 and 2. 

Even ComCom know that we're looking at a very different market dynamic now.

In the fixed market, Orcon, Slingshot and Vodafone are all house hold names now and Snap is getting there.  I think the next 2 years are going to see Slingshot, Vodafone and Snap make some serious ground in the fixed space.

I really don't see Telstra being able to keep 70% market share for every long in the fixed data space.






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  Reply # 634851 2-Jun-2012 22:46 Send private message

sbiddle: Yawn. Same thing we hear every few years.


Yip, agree.  These sorts of guys are always looking at different ideas and testing the response in the media.  This week it caught my interest, I'm sure in another 10 years I'll just regard it as chip wrapper like others here who have seen this stuff time and time again.

I'd turn the question around and ask how serious Telstra actually are about the NZ market. Do they actually have any real interest here? If so why is TCL treated as a 2nd rate cousin that reveives no budget and yet has to deliver a return?


Again agree.  In fact so much so, it's a question I put to them more directly in Melbourne last year.  I followed with interest how AAPT went from a $700m investment to a $60m write off to iiNet for Telecom. 

It seems to me that if they're not careful then Telstra could be looking at yet another of their little OS investments becoming a billion dollar write off.  Reach, PPCW just to name two that hammered them in the past and did impact their share perception locally from what I could see.

If Telstra wanted to invest serious money in NZ they could make a difference. Whether it would generate a ROI is another matter entirely. It's clear over the years that they'd consider this a waste, and have simply let the status quo remain.


Again totally agree. 

I wonder if they simply haven't invested enough to make a return and don't control enough layer 1/2 while having all the core systems needed to support the sort of business they currently have.

But have they simply been waiting for the Chorus thing to become a reality so they can pick up the mobile side without the fixed network?

< TinFoilHatOn > What's this $75/Phone/Data deal about?  Is it costing them money to do?  Are they just buying customers?  If so, why?  Will it cause Telecom to have to race to the bottom?  While it will drop TCL's profit, it will also drive Telecoms profit down.  Doing that will drive Telecoms return down, which in turn will drive the share value down..... won't it?  (or have I just lost the plot due to the rays my TFH is collecting from all the local mobile towers now in my suburb?)

The NBN is going to give Telstra a war chest.  $9b of it.  So it makes sense to set up the ducks to get the best deal in shooting season.

Buy up enough market to drive T.nz shares down, buy up T.nz shares, buy up the 700mhz freq space with a big chunk of the NBN war chest.

Getting back to your question about how to make an RIO.  Check out T.au's annual reports.  They don't know how to stop the decline in revenue and profit in the fixed line market.  I've been watching it off and on for a decade and I've not seen a change yet.

But look at their mobile space.  They know how to build networks, they know how to make massive returns on that network.

No, buying the 'discount mobile provider (2d)' doesn't make any sense at all.  Buying the network that works while you're fishing, that makes sense to me.  Even if it means picking up 50% of the fixed line market and then having to just write if off as others pillage the market share.

D





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