[TelstraClear] Vodafone New Zealand in talks to Telstra about TelstraClear

Forums › One New Zealand (including Vodafone, WxC, Farmside) › [TelstraClear] Vodafone New Zealand in talks to Telstra about TelstraClear

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DonGould

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#636868 6-Jun-2012 18:31

mattwnz:
langers1972: More on this:

http://www.stuff.co.nz/business/opinion/7052893/Why-TelstraClear-is-for-sale

Very interesting opinion piece.

Yes, you have to give Tom points for presenting some interesting views.

The ardvark bit was interesting as well.

I really don't see a 'duopolly' problem unfolding. Even with TT, VF, the market is still very balanced with enough power vested in FX, 2Deg, Chorus, and the ragtag brigade of WISPs.

WISP technology is getting better and better every day.

Another point that has been raised is the 540 staff that VF might tip into the market. I'm quite sure some will just leave. Some will be well over internal change and this will be the last straw for them.

But as Steve pointed out the other day, the biggest fixed line RSP in 10 years could be a company that hasn't even been considered yet. Oh, and if you think Steve's an idiot with out a clue for suggesting that a company could rise in just 10 years to pass Telecom who has been about for 100.... --> www.facebook.com I'm sure Mark wouldn't suggest anything but Steve's on the money.... (...and Steve, do you have something you'd like to share ;) )

I doubt that VF are going to risk tipping to many people out in to much of a hurry and risk those people gathering with existing competitors to undermine its new resources.

FX and 2Deg must both be looking very closely UFB. I'm sure Sky is looking at UFB and planing an ISP service along with telephone.

So all in all, I very much doubt that ComCom are going to even blink at this and consumers aren't going to loose value because there's more than enough market pressure to keep the two big providers in check.

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alasta

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#636882 6-Jun-2012 19:01

DonGould: Another way to look at it is that Allan is keeping a bunch of people, including him self, employed with resources that were gained from overseas.

We often complain about how the banks are taking profits off shore. Well Allan does seem to have been doing quite a good job of making sure TelstraClear doesn't add to that tide.

Try telling that to my friend who was one of many people who got made redundant from the Paraparaumu call centre so that TelstraClear could pursue the industry's failed experiment of offshoring this function.

There was also some speculation in today's Dominion Post that a lot of TelstraClear's head office jobs would be lost from Wellington if the merger were to go ahead.

networkn

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#636896 6-Jun-2012 19:25

DonGould:
networkn:
old3eyes: I wouldn't like to be in TC head office or sales if this merger goes ahead. Lots of people will lose their jobs just as what happened when Telstra took over Saturn and Clear..

As well they should. Dr Freeth should have long ago had a clean out of management of this organization except he should be the first to step down. It's long been an ineffective ISP despite it's many assets. Well managed it could/should have been an absolute powerhouse with the resources at it's disposal.

That's an interesting thing to say.

Another way to look at it is that Allan is keeping a bunch of people, including him self, employed with resources that were gained from overseas.

We often complain about how the banks are taking profits off shore. Well Allan does seem to have been doing quite a good job of making sure TelstraClear doesn't add to that tide.

Money it would seem is going to staff, contractors and consumers in the form of lower prices.

I could be very wrong, not suggesting I'm right, and some of you closer to the company than I am will have a better idea.

But this is how it looks in part from an out side point of view.

I am not sure how you think Telstra has been going for the last 10 years, from as a reseller who has the unfortunate task of having to interact with Telstra in an effort to assist our clients with their IT issues, I can tell you I consider Telstra service, support, provisioning and ESPECIALLY billing to be amongst the worst I've ever encountered. They have made next to no money which is a travesty given how much they charge for some things, and the resources that are at their disposal. It defies belief that the board would have allowed Allan Freeth to continue to run TCL, given he has failed to turn fortunes at TCL around since his tenure. The same issues and problems crop up with customer service and billing all the time, and despite the loud protests from all in sunder they continue on business as usual as if everything is hunky dory. From where I sit AF is an academic who likes the idea of what Telstra could do, but has no idea in this world how to make that happen.

DonGould

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#637060 7-Jun-2012 00:03

alasta:
DonGould: Another way to look at it is that Allan is keeping a bunch of people, including him self, employed with resources that were gained from overseas.

We often complain about how the banks are taking profits off shore. Well Allan does seem to have been doing quite a good job of making sure TelstraClear doesn't add to that tide.

Try telling that to my friend who was one of many people who got made redundant from the Paraparaumu call centre so that TelstraClear could pursue the industry's failed experiment of offshoring this function.

There was also some speculation in today's Dominion Post that a lot of TelstraClear's head office jobs would be lost from Wellington if the merger were to go ahead.

Well you'd be super excited about the pending sale then as VF have done the whole trip and brought the staff back home where as I've yet to hear that CS is heading home at TCL.

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dukezoid

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#637068 7-Jun-2012 01:47

DonGould: Another point that has been raised is the 540 staff that VF might tip into the market. I'm quite sure some will just leave. Some will be well over internal change and this will be the last straw for them...

I doubt that VF are going to risk tipping to many people out in to much of a hurry and risk those people gathering with existing competitors to undermine its new resources.

A random figure chucked around for the purpose of headline making; customers still need to be served, the business and network still has to run. Voda has a history of messy takeovers (ihug - over promoted; call center took a hammering 40+ min wait times. Didn't even leave the Newton Rd premises till years later).

DonGould: But as Steve pointed out the other day, the biggest fixed line RSP in 10 years could be a company that hasn't even been considered yet. Oh, and if you think Steve's an idiot with out a clue for suggesting that a company could rise in just 10 years to pass Telecom who has been about for 100.... --> www.facebook.com I'm sure Mark wouldn't suggest anything but Steve's on the money.... (...and Steve, do you have something you'd like to share ;) )

Steve is no idjit; a shrewd commentator and particularly mighty on the tech side but must beg to differ on the 'new player leading the pack in a decade' supposition.

He actually said "As we enter the UFB world NZ's biggest telco in 10 years could very easily be a player that doesn't even yet exist on a drawing board. "

Like it or not the incumbents we're Chinese whispering about are very much on the drawing board.

FB!? lol great example; sure lets draw comparisons between infrastructure and SAAS, how applicable, can't believe I never saw it before.

DonGould: FX and 2Deg must both be looking very closely UFB. I'm sure Sky is looking at UFB and planing an ISP service along with telephone.

They'd be greatly remiss not to; being in the industry and all. Sky.. ISP... best laugh of the day; now that's something even a Stephen Joyce smothered comcom could not let slide.

The greatest upside of Telstra buying Telecom (after giving Voda a kick up the arse) would be giving Sky a well deserved kick to the (poor exploitedNZconsumer bloated) crown jewels

DonGould: So all in all, I very much doubt that ComCom are going to even blink at this and consumers aren't going to loose value because there's more than enough market pressure to keep the two big providers in check.

guffaw

raytaylor

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#637073 7-Jun-2012 02:24

I am not in favour of this.

Simply because i dont want telstra clears good helpdesk to be absorbed into vodafones.
I have called telstra clear on numerous occasions and the people who answer the phone can look directly at the dslam and operate on the port without needing to go to second level support.

I like their way of doing things.
And i dont want this to dissappear. I hate having to call vodafone.

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quickymart

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#637078 7-Jun-2012 06:08

raytaylor: Simply because i dont want telstra clears good helpdesk to be absorbed into vodafones.

Which "good" helpdesk are you calling? Faults or customer services?

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DjShadow

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#641212 15-Jun-2012 10:50

Stuff is reporting this is almost a done deal, $450-$500 million by the looks

http://www.stuff.co.nz/business/industries/7106376/TelstraClear-deal-close

networkn

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#641220 15-Jun-2012 11:00

That seems light to me, I am not sure what the cable network and infrastructure would be. I know the EBIT Value would be quite low.

DonGould

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#641271 15-Jun-2012 12:06

networkn: That seems light to me, I am not sure what the cable network and infrastructure would be. I know the EBIT Value would be quite low.

The magic in my head at present is $300 a user. So at 200k users, that's only $60m. That's about that iiNet paid for AAPT customers and a number of other deals in .au iirc.

Given the tax value of the deffer-ed loss value that Tim quoted, $500m + $400m is getting close to TCL's so called book value.

But what's it really worth? 10 years ago the fibre network was said to be leading edge, but has it been kept up to date?

What is fibre actually worth? VF would benefit from having the fibre network, but not at 'any price'. Telecom/Chorus fibre is regulated, so they can buy capacity, so TCL's fibre isn't worth more than they can buy capacity from T/C is it?

One might argue that all VF have to do is put new head ends on the fibre and then they can push 69Tb per core over it... but what do those headends cost that push 69Tb? Sure, you can push it, but can you then sell it? There's only so much data you can push at the mobile network and sell to customers.

I agree with Paul's comment about being glad he didn't have to build the business case for this one. It's a complex deal with many hooks from what I can tell.

Tim speculated about it being just a move to off load the retail customers. But that doesn't make sense to me.

I can't seem ComCom agreeing to Telstra owning two fibre networks with only FX to keep them in check.

I don't see the retail customers being worth that much either. TCLs recent marketing has proven just how quickly the brand can pick up customers with a bit of flash marketing, and Telecom have hardly struck back at this point, Orcon seem to be sitting on their hands, who is Snap? and SlingShot don't seem to be pushing that hard either.

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NonprayingMantis

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#641287 15-Jun-2012 12:33

DonGould:
networkn: That seems light to me, I am not sure what the cable network and infrastructure would be. I know the EBIT Value would be quite low.

The magic in my head at present is $300 a user. So at 200k users, that's only $60m. That's about that iiNet paid for AAPT customers and a number of other deals in .au iirc.

Given the tax value of the deffer-ed loss value that Tim quoted, $500m + $400m is getting close to TCL's so called book value.

But what's it really worth? 10 years ago the fibre network was said to be leading edge, but has it been kept up to date?

What is fibre actually worth? VF would benefit from having the fibre network, but not at 'any price'. Telecom/Chorus fibre is regulated, so they can buy capacity, so TCL's fibre isn't worth more than they can buy capacity from T/C is it?

One might argue that all VF have to do is put new head ends on the fibre and then they can push 69Tb per core over it... but what do those headends cost that push 69Tb? Sure, you can push it, but can you then sell it? There's only so much data you can push at the mobile network and sell to customers.

I agree with Paul's comment about being glad he didn't have to build the business case for this one. It's a complex deal with many hooks from what I can tell.

Tim speculated about it being just a move to off load the retail customers. But that doesn't make sense to me.

I can't seem ComCom agreeing to Telstra owning two fibre networks with only FX to keep them in check.

I don't see the retail customers being worth that much either. TCLs recent marketing has proven just how quickly the brand can pick up customers with a bit of flash marketing, and Telecom have hardly struck back at this point, Orcon seem to be sitting on their hands, who is Snap? and SlingShot don't seem to be pushing that hard either.

Valuations tend to happen on a 4-5 multiple of EBITDA for a mature business, and increasing if they are growing.

TCL are growing, albeit slowly, so a multiple of 5-6 probably seems reasonable.

Valuing on a per customer basis is utterly pointless since a business with 1m profitable customers better than a business with 10m unprofitable customers.

either wya it woudl be a huge writedown for Telstra. from the article:

TelstraClear accounts value Telstra's investment at $1.46 billion with little to show for that – TelstraClear's retained losses to June last year totalled $540.7m.

DonGould

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#641395 15-Jun-2012 14:30

NonprayingMantis: Valuing on a per customer basis is utterly pointless since a business with 1m profitable customers better than a business with 10m unprofitable customers.

Agreed. I'm simply commenting on observation of recent iiNet sales/purchases.

To compare, iiNet picked up Internode for ~$120m with 250,000 customers, though Internode didn't have cable and fibre networks, but again, you have to measure off what it will/would cost to by those services at regulated prices.

NonprayingMantis: either wya it woudl be a huge writedown for Telstra. from the article:

TelstraClear accounts value Telstra's investment at $1.46 billion with little to show for that – TelstraClear's retained losses to June last year totalled $540.7m.

Yes. Also agree. It could also be considered that taking the write down now, while they have free cash, is better than waiting it out. At last years profit, it's going to take a very long time before they ever trade out of that retained loss.

Don't get me wrong, I don't even pretend to funny understand how this stuff works and I'm only gazing at the coffee grounds at the bottom of my coffee cup to understand what's really going on.

Who gets the retained loss? Does that go with the deal to VF or do Telstra finally write that down and off?

$540m would give VF a good tax write off against its mobile business. But having taken such a hit, will they be inclined to invest more?

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networkn

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#641408 15-Jun-2012 14:47

I'd imagine TCL will get the retained loss and offset it against parent company taxes. I can't see how VF could technical achieve using the loss on a company that wasn't part of their holdings at the time the loss was incurred.

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#652337 7-Jul-2012 20:15

Just saw this link posted on Twitter:

http://www.nbr.co.nz/article/vodafone-talks-buy-telstraclear-ck-120419

Assuming the speculation is correct the Sale will be announced Tuesday/Wednesday coming

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