[LINK] NBN and Austar

[Tom Koltai]

> -----Original Message-----
> From: link-bounces at mailman.anu.edu.au 
> [mailto:link-bounces at mailman.anu.edu.au] On Behalf Of Birch, Jim
> Sent: Monday, 21 February 2011 10:34 AM
> To: link at anu.edu.au
> Subject: Re: [LINK] NBN and Austar
> 
> 
> Tom Koltai wrote:
> 
> > Opportunity cost on the Austar Spectrum for 15 years = $413,745,424 
> > Annual Value of Spectrum (flat today dollars) therefore =  
> $27,583,028
> 
> > Value of Spectrum left to run = $110,332,113
> 
> Yeah, but:
> 
> The purchase was speculative for Austar and they didn't use 
> much of it. Not so good.  The NBN has an application waiting. 
>  Didn't someone say that value and price aren't identical.
> 
> In addition, there's a significant "possession" element: once 
> NBN have it, they should be able to renew the licence in a 
> post-GFC financial environment where people aren't throwing 
> around hunks of magical money, quite likely with a deal 
> rather than an auction.  They can put a good case that their 
> spectrum is national asset that shouldn't go to the highest 
> bidder, potentially be used to in a rent-seeking racket 
> against them.  They wouldn't auction other key service 
> spectrum, would they?  I guess that NBN Co will start pushing 
> for renewal immediately - if they haven't already - and the 
> current government would have every reason to bed this down 
> quickly and quietly.
> 
> - Jim


Quickly and Quietly as she goes no. 1...

There is always a story behind the story Bones,.... Err, sorry, Jim....

We wouldn't want the public to realise that the Government just made an
extraordinary profit...

Let me see, 183 million on the initial Sale of the Spectrum...
(1999-2000) 
Interest at 6% (cpd P.A.) on $183m over 10 years equals $144m
Minus the buy back cost of $120m (well actually $58m but who's
counting?) Leaves the Government a Healthy Profit of Spectrum PLUS 

$ 207,725,128.00

Additional information...

Incidentally, to purchase the spectrum, Austar entered into a financing
agreement (ten year Loan...) 
... And as well as the opportunity cost, they added of course Loan
interest and repayments...)

Yet it was only barely glossed over in the recent two releases from
Austar....

AUSTAR extends majority of debt facility for five years 
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&
idsId=01134968

AUSTAR Sells 2.3GHz and 3.4GHz Spectrum to NBN Co 
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&
idsId=01151798

And in reference to the loan funding I mentioned above, I quote from the
above P/R:

--The $120 million payment comprises $58 million for the subsidiary that
holds the spectrum licences, with a further $62 million for the
assignment of this subsidiary's debt.--

Therefore 121 million CAPEX had already been paid off.

The total cost to the poor old Austar shareholders?

Only 35.9 cents per share per year.


$5.57 on its opening day...
http://www.thefreelibrary.com/Austar%3a+Strong+Showing+on+Initial+Offeri
ng.-a057824072
$1.09 on the close today...
http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=AUN
#closing_prices

$4.50 in shareholder value disappeared since 1999.

The best way too hide these things is make smoke...

(as in Navy destroyer making smoke trying to hide the whopping big
carrier trying to sneak past the watchful eyes of the regulators...)

Quote/

Regional pay-television company Austar United Communications Ltd has
again attracted the attention of pay-TV company Foxtel, with billionaire
James Packer and Foxtel chief Kim Williams behind the push, according to
a report in The Australian.

Austar's majority-owner, the US-based pay-TV and broadband company
Liberty Global, last year said a tie-up with Foxtel made good strategic
sense, but Foxtel's "relatively convoluted" ownership structure muddied
the waters.

Foxtel is half-owned by Telstra Corporation Ltd, while News Corporation
and the Packer-backed Consolidated Media Holdings Ltd each hold a 25 per
cent stake.

According to The Australian, all three Foxtel shareholders are open to
an Austar deal, and preliminary talks are underway.

Austar made news yesterday for selling its wireless spectrum to NBN Co,
the company behind the broadband network.
/Quote.

In the words of Leonard Cohen..
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That's how it goes
Everybody knows